The North Carolina Bankruptcy Information Blog

As millions will see in 2011, a personal bankruptcy can relieve you of your post-recessionary hangover, helping you dispense with debts accumulated during tough economic times and get you back on the road to financial freedom. And, while choosing bankruptcy has become an easier for so many average Americans seeking respite from their economic woes, which bankruptcy to choose can be a tougher decision.

Whether you choose a Chapter 13 repayment plan that allows you to save your home from foreclosure, or the quick disposal of unwieldy debt under Chapter 7, you can stop creditor harassment and drop your debt load with either personal bankruptcy.…

In the last century, it was not uncommon to hear of average Americans, understandably wary of a then-fledgling banking industry, hiding personal fortunes under household mattresses instead of placing them in various accounts.  And yet while wads of cash are even less common in today’s tough economic times—times when banks coincidentally are mistrusted more than ever—the idea of Americans hording whatever they have for a “rainy day,” is not. Even as incomes continue to fall, personal saving is up, with many families throughout the nation’s now taking a measure of austerity as their personal mantra in throughout this recessionary era.

But what happens when possessing a large sum of cash or savings coincides with filing for a personal bankruptcy?…

In retrospect, we’re all able to see that the recent economic downturn was sparked by a housing crisis full of unscrupulous sub-prime lending that easily spread to prime mortgages as unemployment rates rose. And, as many of you already know, the result of this collapse in the American housing market was a historic increase in the number of mortgage foreclosures, many in neighborhoods that had not previously had any issues with vacant or abandoned properties.

Today, vacant and abandoned properties sit in communities across the nation, driving down home prices and otherwise marring the market for those seeking to sell their inhabited spaces.…

Well, it’s fall. In terms of school, anyway. And if you have a kid heading off to college now or this time next year, it means all kinds of expenses, like dorm supplies, new clothes, a computer and of course, textbooks.

A student’s learning resources have become one of the most underrated expenses of the college experience. Parents today worry greatly about tuition and room and board (as they should) but tend to be quite surprised when another $1,000 is needed just so a student can do the required readings.

For parents in a tough financial spot but who managed to send a child off to college, textbook costs can become a unexpected economical pain-point.…

This unrelenting economic downturn has been tough on all Americans—whether they be single, dating, engaged, married or widowed. But, as anyone who has ever been married already knows: money (or lack thereof) can be the main cause of many couple’s marital strife. As a result, in this especially difficult economic climate—full of job insecurity, foreclosures, and slow economic gains—many have been pushed to the brink of bankruptcy, and, along with them, the people who love and wanted to marry them.

So what should you do if you are preparing to marry someone drowning in debt?

While as a general rule, you are not liable for your spouse’s debt, in some cases the debt follows the “I Do’s” and you may end up paying that debt anyway.…

Given the popularity of channels like HGTV and all of those televised extreme home makeovers , it’s more than apparent that America is a nation full of  “do-it-yourselfers:” people drawn to the idea of going it alone in order to get it done right—their way, the first time.

As a result, it’s not surprising that in this self-supported culture there are so many services available online and offline that, for a fee, offer any DIY inclined consumer the opportunity to file their own bankruptcy. In fact, in these tough financial times, DIY bankruptcy petition “farms” are becoming increasingly popular for cash-strapped debtors who know that they need bankruptcy protections but don’t believe that they can afford an actual bankruptcy attorney.  Using these services could spell trouble for your self-perpetuated petition and your already beleaguered budget.  Here’s why:

Lack of Adequate Information
When you begin a DIY project for the first time like installing a light or fixing a leaky faucet or even building a home addition, it’s often helpful to have someone there to do more than just sell you the materials.…

For most bankruptcy bound individuals, a discharge of all individual debts is considered the Holy Grail of any bankruptcy filing, yielding a permanent injunction that prevents creditors from collecting on debts. However, any good discussion of debt dischargeability also tackles the primary exceptions to look out for when considering any bankruptcy filing.

Exceptions to the power of a bankruptcy discharge, include:

Certain Tax Obligations
Withholding taxes are not dischargeable in bankruptcy, although you may be able to use a Chapter 13 case to pay these over time (notwithstanding any accrued penalties and interest).  Similarly, sales taxes are not dischargeable, but again, Chapter 13 can establish a payment plan for lessening the load and paying this out over the long haul.…

It’s almost February and ‘tis the season for thinking about tax time—even more so if you find yourself considering the benefits of bankruptcy. So, if you believe bankruptcy is the right option to help you start fresh in 2010, in addition to trying to get your 2009 taxes filed in a timely manner, and wondering whether you can discharge any income tax debt in your bankruptcy filing, you may also be thinking about how you can protect your precious tax refund from creditor claims.

Many of our clients automatically assume they will lose their rental property if they file for bankruptcy. Isn’t that the whole idea of bankruptcy? That you give up everything you have, with a few exceptions, in exchange for getting the debt collectors off your back?

Well, no. Many factors come in to play in determining whether or not you will be forced to sell your rental property, including whether you file chapter 7 or chapter 13, how much money you owe on the property and how much income you receive from it.

Let’s start with chapter 7. If you file chapter 7, you get an exemption for the equity in your primary residence – how much depends on the state you live in – but rental property doesn’t qualify for the standard residence exemption.…

You may have read on the blog, or elsewhere, that many are calling our current economy a “middle class recession.” This is because the numbers are way up on bankruptcies filed by those who make more than $60,000 per year, up 6.9 percent from 2008. Bankruptcies on the whole are up 36.5 percent from this time last year.

So why does it matter how much money a person makes when filing bankruptcy? Well, because bankruptcy is often considered an escape route for the financially unreliable or worse yet, “something poor people do.” It’s just not true.

Today, bankruptcies are increasing among people in the real estate profession, namely developers and agents.…

The decision to file for bankruptcy is never an easy one, especially where married couples are involved. Spouses must settle issues of dishonesty, mistrust, and frustration–and that’s even before any of the complex steps of collecting necessary documents and filing papers.

But the story for insolvent couples does have a caveat: joint bankruptcy protection. Married debtors can file their cases jointly with one trustee, one filing fee, and one total case. Debtors can bring to the table their joint debts as well as debts they hold only in their name. To be a joint case, the debtors need only be legally married.  And they must be a man and a woman.…

It’s tax season. Which means that for most people, it’s time to realize just how much we give to Uncle Sam every year. For some, the prospect of a refund provides a glimmer of hope that some new money is coming in soon to pay off debts.

Just a quick little note on your tax dollars before we get into the meat of this post: it is actually better to owe just a little bit of money after filing because that means that you have used more of our your own money throughout the year instead of giving it all to the government.…

Part of understanding bankruptcy is knowing who the professionals are that you will meet and deal with along the way. From your attorney to even your creditors, it helps provide a solid foundation of comfort to actually understand the role of those who are playing a role in your financial future.

One of those individuals is the case Trustee, the most prominent member of the bankruptcy process. And, the involvement you have with the case trustee depends on which chapter of bankruptcy you are filing.

As you may know, the 2 main “chapters” are 7 and 13. Well over 95% of all bankruptcy cases filed are filed under Chapter 7 or Chapter 13.…

Even in these tough economic times, everyone wants their family and friends to have a nice holiday—full of fun, frivolity and festive giving. And, even if you find yourself among the millions considering bankruptcy in the New Year, you may believe, now more than ever, that it’s open [holiday] season to shop for pricey presents using problem credit cards. In fact, many Americans do charge up expensive tabs in the months preceding the Christmas season when anticipating a bankruptcy—hoping to secure some great gifts prior to wiping away these same debts, along with many others, in January or February.

However, it’s never been more important to avoid a holiday spending binge when seeking this fresh financial start.…

If you’re considering a Chapter 7 bankruptcy, chances are you’ve already heard about the Means Test—the test that determines whether or not you qualify for a Chapter 7.

If you make less than the median income for your state, you don’t even have to worry about the means test!  (To find out what your state’s median income is, you can go to http://www.justice.gov/ust/eo/bapcpa/20091101/bci_data/median_income_table.htm).

If you make more than your state’s median income you may still be able to pass the means test by deducting certain expenses from your gross income.  You’re going to want to talk to a qualified bankruptcy attorney about this one, though—the means test is notoriously complicated!  Your attorney has the knowledge and experience to determine what amounts of your income have to be applied to the means test as well as what expenses may be deducted.…

Have you avoided filing bankruptcy because you’re afraid you’ll lose your home, your automobile, your personal property? You don’t have to be afraid! Bankruptcy laws protect you from becoming homeless, without a car, household goods, your jewelry, or the tools you need to do your job.

When you file a Chapter 7 bankruptcy you are allowed to protect—or, exempt—some or all of your property from being taken away from you. In fact, in lots of cases, bankruptcy exemptions allow you to keep everything you own!

If you’ve lived in North Carolina for at least two years, you can exempt up to $35,000 of the value of your home.…

Americans young and old, hit hard by the recent economic meltdown, are turning to any available income, accounts, or other resources to pay down today’s mounting mortgage debt, crushing credit card rates and high health care costs. One such resource—liquidating a registered retirement account like a 401(k)—might appear to be a quick and easy fix to pay down looming expenses or even to avoid filing for bankruptcy.

In reality however, it’s better to “stay away” from 401(k)s, leaving these and other retirement accounts untouched and intact in times of financial distress—even for those bankruptcy bound.

Why, you ask?

Retirement Accounts Like Your 401(k) Are Exempt From Bankruptcy
First and foremost, it’s important to understand that your 401k is safe—even in bankruptcy.…

Few of us learned much about balancing a checkbook, let alone managing our finances during high school. And for many years credit card companies have been trolling college campuses for fresh bodies to press into servitude. So it comes as no surprise that so many young adults are overloaded with debt. Young people, in their early to mid 20’s, are finding out how easy it is to get into debt, and how backbreakingly hard it is to get out of it. Add the present economy and virtual impossibility of securing a decent paying job, and you’ve got the recipe for a disillusioned, frustrated, and eventually hopeless generation.…

There are at least three excellent reasons why should be very circumspect about reporting your assets accurately when you file for bankruptcy. The failure to list assets can have a serious impact on your case and your future ability to file. Be careful to advise your bankruptcy attorney of all assets, regardless of how insignificant the asset may seem. Consider these important reasons to accurately list your assets:

First, and perhaps most importantly, inaccurately reporting assets could land you in jail. Since almost everything you turn in in connection with your bankruptcy will bear your signature, fraudulent misrepresentation on these forms is perjury.…

Planning for your retirement early is extremely important, yet appreciating this point can be difficult for people who aren’t looking to retire soon. It’s even harder to remember the importance of planning for retirement when it remains years or even decades off…all while the harsh realities of the economy are here today. Credit card companies compound the problem, advertising instant gratification while minimizing focus on long term financial stability. As the credit markets tighten, it’s tough to resist cutting back on retirement contributions. For those with a significant nest egg, it’s very tempting to cash out now and rebuild later.

Unfortunately, many of us approach bankruptcy as a last resort, an option to be avoided at all costs in the interest of our future financial soundness.…