Bankruptcy Attorneys Charlotte
North Carolina Bankruptcy Law
Bankruptcy relief is based upon Federal Law, although North Carolina law also comes into play. Most importantly are North Carolina Bankruptcy Exemptions that determine what property you may keep. One of many bankruptcy myths is the bankruptcy trustee will take your house or car. That rarely happens!
Another important state law issue is the North Carolina median income numbers representing the starting point of the bankruptcy means test analysis. The bankruptcy means test is used to determine whether an individual qualifies for Chapter 7 vs. Chapter 13 bankruptcy. If you happen to make more than the median income numbers do not assume you fail the means test and can't file Chapter 7. There are many deductions that help you qualify such as a mortgage, car payment, childcare, charity giving, health insurance, support giving to older parents, and taxes. Also- if the majority of your debts are "business debts" Congress has decided the means test requirement will be waived.
At Witt Law, P.A. a Charlotte lawyer will meet with you for a free bankruptcy consultation including means test analysis. Another benefit we provide is an eye towards bankruptcy avoidance via debt settlement. The last thing a collection agency or collection department wants to hear is a call from a bankruptcy attorney saying they must either compromise or risk getting zero in bankruptcy.
What Can I Discharge in Bankruptcy?
Bankruptcy discharges most debts including:
- Credit card debt
- Medical debts
- Past or future repossession balances from houses and cars
- Early termination bills from cell phones and apartment leases
- Taxes more than 3 years old
- Most other debts
What Can't I Discharge in Bankruptcy?
Bankruptcy can't eliminate all debts. Debts usually surviving are:
- Alimony and child support
- Student Loans
- Taxes less than 3 years old
- Fraudulent debts
- Recent Cash advances
The two main types of bankruptcy for individuals and married couples are Chapter 7 and Chapter 13. Chapter 11 bankruptcy is usually filed by a business trying to reorganize. As previously mentioned a married couple may file a joint bankruptcy, but just because you decide to file does not mean your spouse must also file.
Chapter 7 Bankruptcy
Most people considering bankruptcy are looking to file Chapter 7 which is often called a "Straight Bankruptcy" that involves no payments and is usually completed in less than six (6) months. If you are simply looking to discharge debt and get a fresh start then a Chapter 7 is a relatively painless option. The big question is how long does it take to rebuild credit? Well- most employed debtors are able to obtain an unsecured credit card immediately upon exiting Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
Chapter 13 is often called the "Wage Earner Bankruptcy" requiring monthly payments for 3- 5 years. Those payments usually repay some but not all of your debts. The payment amount is based on your income and debts. This option is usually the last resort to save a home from foreclosure. Although it usually won't lower a regular payment of a first mortgage it can allow you to cure "missed payments" over the life of the plan. If you have a second or third mortgage or equity lines they potentially can be eliminated via lien stripping in Chapter 13.
New Bankruptcy Law
The Bankruptcy Abuse Prevention and Consumer Protection Act or "New Bankruptcy Law" which went into effect October 17, 2005 is not so new anymore. That being said there is still a common misconception that the Chapter 7 option was eliminated. There is no denying the credit card lobby pushed hard for the new law and hoped more people would be forced to repay at least some of their debts in Chapter 13, but that has generally not materialized. Although filing bankruptcy is now more expensive and requires more paperwork, most individuals who qualified to file Chapter 7 under the old law still qualify under the new law.
What Can I Keep in Bankruptcy?
There are certain items you may keep after you file for bankruptcy in Charlotte, North Carolina. If you have been a resident of North Carolina for at least 2 years then you claim NC exemptions. If you have lived in NC for less than 2 years then you will either be using Federal Exemptions or the exemptions from the State you used to live. Bankruptcy exemptions are subject to change. Claiming the correct exemptions is another critical role of your bankruptcy attorney- ask questions to ensure you understand if any of your property is at risk. Updated information can be found in the North Carolina general statutes.
NC Bankruptcy Exemptions: (subject to doubling for married couples)
- $35,000 equity in your primary residence.
- 100% of earnings in the last 60 days.
- 100% of retirement accounts such as 401k's and IRA's.
- $5,000 "wildcard" exemption in any property or cash.
- $3,500 equity in a vehicle. (often stacked with wildcard exemption)
- $5,000 in household items.
- Other exemptions are available.
Secured Debts such as houses and cars
Bankruptcy usually does not wipe out or extinguish liens, such as mortgages, deeds of trust, or tax liens. That means if you want to keep your house or car you have to keep paying. Remember that creditors want your money not your house or car.
If you still owe money on your car, you can choose to reaffirm the debt to the secured lender. Under Federal Bankruptcy law, you must reaffirm your car loan within 45 days after your typical single Court appearance or "341 bankruptcy meeting." Under the "new bankruptcy law" you no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency. That being said many creditors not named "Ford Motor Credit" still allow debtors to keep a car without reaffirming.
Redemption is another option to keep secured property by allowing debtors within 45 days of the "341 meeting" to purchase it from the secured creditor in a single payment for its present value.
North Carolina is located in the Federal 4th Circuit which does not require reaffirmation for a house. That means a Chapter 7 bankruptcy will discharge the debt on a house, but not the lien. Translation: If you want to keep your house keep paying, but if at some point in the future you decide to move or walk away you can without fear of being sued for a deficiency balance.
We hope the information provided on this site has been helpful, but bankruptcy law is complex and confuses even non-bankruptcy attorneys. Another complication is bankruptcy is different for everyone depending on what you own and what you owe. There is no substitute for meeting face to face with a qualified bankruptcy lawyer best able to explain all your options. Federal Law requires you be given the mandatory "bankruptcy disclaimer" at this meeting before individual advice may be given. Please call our office at (704) 493-6851 or email using the Quick Contact form on this page for a free bankruptcy consultation.