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Secured Debts such as houses and cars
Secured Debts such as houses and cars
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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.

Bankruptcy Attorneys Charlotte
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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.