Bankruptcy is a legal and honorable way to wipe out most of your debts. Under the United States Constitution an individual or a business entity has the legal right to file court proceedings to wipe out most of their debts. Once the bankruptcy petition is filed with the federal courts, an automatic stay goes into effect which is a court order from the federal judge stopping nearly all collection attempts by creditors. At the conclusion of the bankruptcy, the debtor usually will receive a discharge of debts and final decree order from the federal judge discharging or eliminating most of the debtor’s debts.

Filing either a Chapter 7 bankruptcy or Chapter 13 bankruptcy will stop your creditors from taking legal action against you without first obtaining the bankruptcy court’s permission. The filing of bankruptcy can stop foreclosures, repossessions, wage garnishments (with some exceptions), lawsuits, etc. Bankruptcy creates an automatic stay.

There are two main types of bankruptcies that the majority of people file. They are a chapter 7 bankruptcy that wipes out most unsecured debts, such as credit card debt, personal loans, and medical bills. The other main type of bankruptcy filing is a chapter 13. A chapter 13 is a wage earners repayment plan. Its main purpose is to save a house from foreclosure and to repay back taxes.

There is also a chapter 12 family farmer bankruptcy. A chapter 11 is a business bankruptcy. Bankruptcies that are rarely used are a chapter 9 municipal bankruptcy, such as Detroit Michigan. There is also a chapter 15 bankruptcy which deals with international debts and creditors.

A chapter 7 bankruptcy is usually used to wipe out or eliminate most unsecured debts such as credit cards, medical bills, personal loans, and some old taxes. Chapter 7 bankruptcy does not usually permanently stop the foreclosure of a home or the repossession of a car. Secured debts such as homes and car debts can be eliminated in a chapter 7 bankruptcy, however the home or car must be surrendered, or given back, to the mortgage company on a home, or finance company on a car.

A chapter 13 bankruptcy is a wage earners plan or repayment plan. The main purpose of a chapter 13 is to stop the foreclosure of a home or the repossession of a car. If a person decides to file a chapter 13 to stop the foreclosure of their home, the chapter 13 bankruptcy allows a person over a 36 to 60 month repayment plan to pay back the arrearages, or amount behind, on the home mortgage. In theory, it is like a loan to get a person caught up on their mortgage payments over a 36 to 60 month repayment plan. Most unsecured debts, such as credit cards and medical bills, are paid back at a rate of pennies on the dollar. The debtor will make payments to a chapter 13 trustee appointed by the court. The chapter 13 trustee will receive payments from the debtor and forward payments on to the creditors, including the mortgage company.

The debtor must provide proof of sufficient wages to make the future monthly payments to the chapter 13 trustee. If the debtor does not make these monthly payments the chapter 13 trustee will recommend the debtor’s case be dismissed, or kicked out of the bankruptcy court, due to lack of sufficient income or wages.

Another reason a person may file a chapter 13 bankruptcy is when the person fails the means test and makes to much money. The courts use income guidelines to determine if a person must file a chapter 13 due to excessive income. In this event the person is required to file a chapter 13 and pay back a percentage of their unsecured debts over a five-year monthly repayment plan.

The initial consultation with Damon or Terry will usually take from 30 minutes to one hour. They will meet with you and discuss your debts and property you own. They will give you information as to what debts can be eliminated and if there is a possibility that some debts may not eliminated based upon federal law. This meeting is usually very informal, almost like “talking at the kitchen table” at your home. They will answer any questions you have about your situation. They will also discuss with you all your options. Again, this is a very informal “laid back” meeting. At the meeting they would discuss payment options with you to pay the attorney’s fees.

You are not required to bring anything with you to the initial consultation. However, we do suggest that you bring certain documents that will help us understand your situation. The documents are as follows:

1. your drivers license and social security card;
2. a payoff statement on your home if you own a home;
3. your last 30 days of paycheck stubs or documentation regarding your earnings;
4. registration and a payoff statement on any automobiles in which you are making payments;
5. a list of the debts which you owe. Such as credit card debts, medical bills, personal loans, back taxes, past repossession or foreclosure debts, and any other major debts which you owe. We do not have to have a detailed itemized list, but just a basic “ballpark” amount you owe.

No! Again, this is a friendly informal meeting between you and Damon or Terry.

No, we do not do a high-pressure sales pitch to you. You have the decision after the consultation to retain us to help you or you can think about it for a few days and come back to retain us if you desire is to help you. No pressure!

We are going to sound like a politician and not give you a straight answer to your question. The cost depends upon the complexity of your case. At the initial consultation Damon or Terry will give you a projected cost of the bankruptcy. During your initial phone call with the staff members, they will give you a rough estimate as to what the attorneys fees cost will be.

When your bankruptcy is filed with the court, an automatic stay immediately goes into force, regardless of the type of bankruptcy filed. This means your creditors cannot proceed with foreclosure, repossession or any other legal actions against you unless they obtain permission from the bankruptcy court. Child support and alimony payments are usually the exception to the automatic stay. The automatic stay also does not apply to criminal charges against a debtor. Additional details regarding the automatic stay can be found under Title 11, Section 362 of the US Bankruptcy Code.

The bankruptcy automatic stay does have limitations based on Title 11, Section 362. Some of the limitations include:

• Commencement or continuation of criminal actions or proceedings
• Establishment or modification of domestic support obligations (Child support, alimony)
• Collection of and withholding of income for domestic support obligations
• Tax refunds
• Repeat filers
• Two cases pending in 1-year period after first case was dismissed, automatic stay limited to 30 days but can be extended
• Three cases pending in a 1-year period after first two cases were dismissed, no automatic stay but can be imposed with court order.

You should first understand the difference between your credit score and your ability to obtain credit. Often, these words are used interchangeably and confusion can occur. Your credit score is the number the credit reporting agencies assign to your credit. It is based on your history of making payments on your debts. Your ability to obtain credit is based on your ability to make payments in the future and is determined by your income and your debts. If your debts exceed your ability to make payments, you may be unable to obtain credit even if you have consistently paid your debts on a timely basis. In other words, you may have a good credit score yet be unable to purchase a car because you have too much debt. Filing bankruptcy will most likely reduce your credit score in the short-term. However, filing bankruptcy also eliminates many of your debts and may improve your ability to obtain credit in the future.

Check out this extended blog post where we talk about the impact of bankruptcy on your credit score.

No! This has been one of the bad rumors about bankruptcy for many years. When you file the bankruptcy you are actually cleaning up your credit! Most of our clients who file bankruptcy, especially a chapter 7, are able to obtain credit immediately after the bankruptcy is complete. However, for about the first two years after the bankruptcy you will have to pay slightly higher interest rates on any credit you obtain. There is a whole credit industry targeted at obtaining credit for people immediately after they file a bankruptcy. Most of our clients are receiving numerous letters in the mail after the bankruptcy offering them credit. Most of our clients in about two years after the bankruptcy have rebuild their credit and can usually obtain as much credit as someone with so-called “good credit”. Check with us for more details.

Assuming only one spouse files bankruptcy, the impact of bankruptcy on the non-filing spouse will depend if there are joint debts. If your spouse has cosigned on a debt, such as a house or car, he/she is still responsible for payment of the debt and the bankruptcy will not discharge or eliminate your spouse’s responsibility. This is also true for credit cards, personal loans, and any other debts your spouse has joint responsibility for. It is also important to understand that you and your spouse are jointly responsible for medical debts if you live in North Carolina and were married when the debts were incurred. As a result, medical debts discharged in bankruptcy will still be the responsibility of the non-filing spouse. You are also responsible for your spouse’s medical debts and any other debts you have cosigned with your spouse.

Generally speaking, if someone cosigned a debt with you, and that debt is discharged or wiped out in the bankruptcy, the person who cosigned with you will be responsible for that debt. That’s why it is always dangerous to cosign on a debt with someone else.

The answer to this question depends on the reason you are considering bankruptcy. If you are trying to avoid foreclosure on your home, you may be able to refinance the property or work out a loan modification with your existing mortgage company. If you are not interested in keeping the house, you could consider selling the property or even signing a deed in lieu of foreclosure with the mortgage company. However, you should be aware there may be tax implications or you may even increase your debt with these options. You should definitely seek tax and legal advice when you consider these options.

If most of your debts are unsecured including most credit cards, personal loans, etc. you may want to consider a debt consolidation. You should be extremely careful when considering a debt consolidation company, since some, but obviously not all, have been found to prey on individuals in desperate situations. These are often short-term solutions to a problem that ultimately leads to the filing of bankruptcy. Unfortunately, that decision is often reached after you have paid a considerable amount of money to the debt consolidation company and your credit score has decreased because debts are still not paid on a timely basis.

Some people also consider equity lines of credit on their home to payoff credit cards and medical bills. This can be extremely risky since you have now attached another lien to your home that ultimately gives another company the ability to foreclose on your home should you get behind on the line of credit payments.

There are bankruptcy petition preparers that will type the paperwork for a fee; however, they are unable to provide legal advice. This means they cannot answer many of the questions you may have regarding your property. A bankruptcy preparer cannot appear at the meeting of creditors with you to answer questions or appear in court with you. Unfortunately, some preparers have little training and individuals have lost property including homes, cars and cash because they did not have the proper legal advice.

You are not required to have an attorney to file bankruptcy. Some individuals have obtained the bankruptcy forms, completed the forms and filed the paperwork themselves, also known as pro se. However, you should determine if it is worth the risk of losing your property because the forms were not completed properly or the appropriate law was not used to protect your home, car and other assets? It is not uncommon to see an individual who filed pro se or with a bankruptcy preparer seek the advice of an attorney after the meeting of creditors or after an appearance in court in front of the judge. Filing bankruptcy is not a simple process. Even attorneys with considerable experience in other areas of law will not attempt to respond to bankruptcy questions from friends and family, since it requires someone with considerable knowledge and experience.

As part of the bankruptcy process, you are required to complete a Means Test. This process serves two purposes: 1) to determine whether you qualify for a Chapter 7 bankruptcy; and 2) if filing a Chapter 13 bankruptcy, it may establish your payment depending on the monthly disposable income. There are three steps in which you may qualify for Chapter 7 bankruptcy under the means test. The steps are somewhat complicated, so the information below is a summary.

First, it compares your household’s average gross income for the 6 months prior to filing bankruptcy to your state/county’s median monthly gross income adjusted for household size. If your household’s average monthly gross income is below the median, the means test stops here and you will qualify for a Chapter 7 bankruptcy.

Second, if your household’s average monthly gross income is greater than the state/county’s median, the next step will compare your household’s average monthly gross income to expenses, both actual and Internal Revenue Service standard expenses, to determine your household’s monthly disposable income. If your household’s projected disposable income for the next five years (your household’s monthly disposable income times 60 months), is less than $6,000, you should qualify at this step and the means test would stop here.

Third, if your household’s projected disposable income for the next five years exceeds $6,000, a third step is necessary. This step will compare your household’s projected disposable income for the next five years to 25% of your non-priority, unsecured debts. If your household’s projected disposable income for the next five years is less than 25% of your non-priority, unsecured debts, you may still qualify for Chapter 7 bankruptcy.

For updated information, you may go to the U.S. Trustee Program’s Census Bureau Median Family Income by Family Size table.

The attorney fee payment plan varies by attorney, but Duncan Law understands it is difficult to make a large payment while undergoing financial struggles. As a result, you may develop your own easy payment plan that meet your needs, whether weekly, monthly, etc. However, the Western and Middle Districts of North Carolina Bankruptcy Courts requires that 100% of the attorney fees in a Chapter 7 bankruptcy be paid prior to filing the bankruptcy. A portion of the attorney fees in a Chapter 13 bankruptcy must be paid prior to filing and the remaining can be added to the bankruptcy payment plan.

The federal court charges an administrative fee for services provided by the bankruptcy court. There are various fees charged by the bankruptcy court, but the current fee to open/file a Chapter 7 bankruptcy is currently $338.00 and a Chapter 13 bankruptcy is $313.00. The bankruptcy attorney is not compensated or paid by these fees.

With the new bankruptcy laws in 2005, Congress passed legislation requiring a person filing bankruptcy to take a credit counseling course within the 180-day period preceding the date the bankruptcy case is filed with the court. A certificate of completion must be filed with your bankruptcy. Most of the approved credit counseling companies provide the course online and the fees vary by company. However, it is important that you take your credit counseling course from an approved credit counseling company.

With the new bankruptcy laws in 2005, Congress passed legislation requiring a person filing bankruptcy to take a financial management course after the bankruptcy is filed but prior to the scheduled date of discharge in the bankruptcy. Once the course is completed, a certificate of completion must be filed with the bankruptcy court prior to your debts being discharged. If the certificate of completion is not filed with the court prior to the scheduled discharge date, the bankruptcy court will simply close your bankruptcy without issuing a discharge of debts. This can be costly since you will be required to file a motion with the court to reopen your bankruptcy in order to file the financial management certificate. At this time, the court charges $260 to reopen a Chapter 7 bankruptcy and $235 to reopen a Chapter 13 bankruptcy. Most of the approved credit counseling companies provide the course online and the fees vary by company. It is important that you take your financial management course from an approved credit counseling company.

It is important to take the course through an approved company or you will be required to retake the course.

We strongly recommend you obtain a credit report to supplement what you already know about your creditors. It is easy to forget about a creditor you owed several years ago that is no longer sending bills to you. And from time to time, a creditor will erroneously apply a charge to your credit that you did not incur. This may happen if the person that made the charge has a similar name or even similar social security number. We have also seen clients be the victim of identity theft. It is extremely important to list all your debts, excluding your ongoing utility bills, on your bankruptcy. Recent laws entitle you to a free credit report annually. This site is listed on the Internal Revenue Service website and will not charge you a fee unless you have received a credit report from this site in the past year.

Chapter 7 bankruptcy:

• If you have received a discharge in a previous Chapter 7 bankruptcy, you are not eligible to file another Chapter 7 bankruptcy for eight years. The eligibility is eight years from the date of the filing of the first bankruptcy.
• If you have received a discharge in a previous Chapter 13 bankruptcy, you are generally not eligible to file a Chapter 7 bankruptcy for six years; however, there are some exceptions. You can refer to Title 11, Section 727 for the exceptions.

Chapter 13 bankruptcy:

• If you received a discharge in a previous Chapter 7 bankruptcy, you are not eligible to file a Chapter 13 bankruptcy for four years and receive a discharge.
• If you received a discharge in a previous Chapter 13 bankruptcy, you are not eligible to file another Chapter 13 bankruptcy for two years and receive a discharge.
• It is possible to file a Chapter 13 bankruptcy prior to the time frames listed above, but you will not receive a discharge of your debts. However, this may be a viable option if you are trying to avoid foreclosure on your home or repossession of a car or truck after having received a discharge in a previous bankruptcy filing.

The length of the bankruptcy varies depending on the type:

• A Chapter 7 bankruptcy is discharged approximately 95 – 110 days after the day the bankruptcy is filed. The final decree closing the case can be entered as soon as the discharge date or could last for over a year depending on the circumstances surrounding your bankruptcy.
• A Chapter 13 bankruptcy is discharged after all payments have been made to the Trustee as outlined in the bankruptcy plan which is usually 3-5 years. The final decree closing the case is usually entered 3-4 months after the discharge.

In a Chapter 7 bankruptcy, the court will send a Notice of Meeting of Creditors within a few days of filing, notifying the creditors of your bankruptcy filing and the date of the meeting of creditors. In a Chapter 13 bankruptcy, the attorney for the debtor will send a notice to the creditors within a few days of filing. The court will also send a Notice of Meeting of Creditors but it usually takes longer in a Chapter 13 bankruptcy.

Alimony and child support are not discharged or eliminated in either Chapter 7 bankruptcy or Chapter 13 bankruptcy. There is also no stay imposed on domestic support obligations (alimony or child support) when you file bankruptcy. As a result, you must continue to pay on-going alimony and child support payments. If you are behind on alimony or child support when you file a Chapter 13 bankruptcy, you will want to include the amount you are behind, arrearages, in your Chapter 13 bankruptcy so they can be included in the payments to the Chapter 13 bankruptcy Trustee. It will be very important to notify your county and state child support agency of your bankruptcy filing.

Most student loans are not discharged or eliminated in either Chapter 7 bankruptcy or Chapter 13 bankruptcy. In most cases, you will continue to make direct payments to the student loan creditor after your bankruptcy is filed.

Taxes are not discharged or eliminated in Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, you will need to schedule a payment plan with the taxing agency after your bankruptcy is completed, since most agencies will not discuss a payment plan while you are in bankruptcy. In a Chapter 13 bankruptcy, the taxes owed at the time of filing should be included in your bankruptcy and the payments to the Chapter 13 bankruptcy Trustee. As long as the taxing agency files a proof of claim in your Chapter 13 bankruptcy, the Trustee will pay the past due taxes through your Chapter 13 Plan.

Regardless of whether you file Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will be required to attend a meeting of creditors after your bankruptcy is filed. This meeting usually occurs 30 – 45 days after your bankruptcy is filed and is conducted by the bankruptcy Trustee. Your creditors are given notice of this meeting and have the right to attend. This is sometimes called a 341 meeting since it is outlined in Title 11, Section 341 of the United States Bankruptcy Code.

The meeting of creditors is an opportunity for your creditors to question you about your financial situation and the debts you owe them. Often, there are no creditors at your meeting of creditors. The trustee will conduct the meeting of creditors and will also ask you questions about your bankruptcy paperwork filed with the court.

A Chapter 7 bankruptcy trustee is a person, usually an attorney, who is appointed by the bankruptcy court to oversee your bankruptcy “estate.” The trustee reviews your estate to determine if there are any non-exempt assets which he/she can liquidate (sell) to pay your creditors for all or a portion of the debt owed to your creditors. Most Chapter 7 bankruptcy cases are “no asset” cases in which there are no assets to liquidate and pay your creditors.

A Chapter 13 bankruptcy trustee also oversees your estate and is the “middleman” in that he receives your monthly Chapter 13 bankruptcy payments and distributes this money to your creditors based on the priority as established in the Chapter 13 bankruptcy plan.

The meeting of creditors is held in various locations depending on where you live and the type of bankruptcy you file. You should be provided the location of your meeting of creditors at your bankruptcy signing appointment. However, attached are the websites with the various locations of meeting of creditors in the U.S. Bankruptcy Court for the Western District and Middle District of North Carolina. You should validate the location of your meeting of creditors when you receive the notice from the Court.

Chapter 13 meeting location by Trustee:

Western District

• Warren L. Tadlock: your meeting of creditors will occur at the Trustee’s office. You may go to the Trustee’s website to confirm the location address.
• Steven Tate: your meeting of creditors will occur at the Cleveland County Courthouse, 100 Justice Place, Shelby, NC. You may go to the Court’s website to confirm the Courthouse address.

Middle District

• Kathryn L. Bringle: your creditor’s meeting will occur in the First Floor Creditors Meeting Room, 226 South Liberty Street, Winston-Salem NC
• Richard M. Hutson, II: your creditor’s meeting will occur in the Venable Center, Dibrell Building – Suite 280, 302 East Pettigrew Street, Durham, NC
• Anita Jo Troxler: your creditor’s meeting will occur in the First Floor Creditors Meeting Room, 101 South Edgeworth Street, Greensboro, NC

Chapter 7 meeting location:

Western District

• If your meeting of creditors is in Charlotte, it will be held at 402 West Trade Street, Charlotte, NC. There is no website for this location, but it is directly across the street from the Charles Jonas Federal Courthouse.
• If your meeting of creditors is in Shelby, it will be held at the Cleveland County Courthouse, 100 Justice Place, Shelby, NC. You may go to the Court’s website to confirm the Courthouse address.
• If your meeting of creditors is in Wilkesboro, it will be held at 207 W. Main Street, Wilkesboro, NC. You may go the Court’s website to confirm the Courthouse address.

Middle District

• If your meeting of creditors is in Greensboro, it will be held in the First Floor Creditors Meeting Room, 101 South Edgeworth Street, Greensboro, NC
• If your meeting of creditors is in Winston-Salem, it will be held in the First Floor Creditors Meeting Room, 226 South Liberty Street, Winston-Salem NC
• If your meeting of creditors is in Durham, it will be held in the Venable Center, Dibrell Building – Suite 280, 302 East Pettigrew Street, Durham, NC

The “plan” is a document used by the Chapter 13 bankruptcy Trustee and the court to administer your bankruptcy. It also gives instructions to your creditors and provides them with basic information about how their claims will be paid. It also includes necessary motions to be filed with the court at the time of your bankruptcy filing.

A discharge from bankruptcy means you are no longer legally required to pay the debts owed to creditors which were listed in your bankruptcy and discharged. It is your goal to obtain a discharge in bankruptcy. The court can deny a discharge if you fail to take and file the financial management course prior to the date scheduled for discharge. The time frame for discharge varies by the type of bankruptcy filed.

• In a Chapter 7 bankruptcy, the discharge from the court is usually issued approximately 95 – 110 days from the date your bankruptcy is filed or approximately 65 – 70 days after the first date scheduled for the meeting of creditors. Some debts, including auto loans or mortgage loans, are not discharged if a reaffirmation agreement is signed.

• In a Chapter 13 bankruptcy, the discharge from the court is issued after all plan payments have been made to the Trustee, usually within 3-5 years from filing the bankruptcy, and after a motion for discharge has been filed with the court.

The court may dismiss your Chapter 13 bankruptcy if you fail to make payments to the Trustee or if your debts exceed your ability to pay. If your bankruptcy is dismissed by the court you will be responsible for all your debts and the creditors may proceed with collection actions against you as well as proceed with foreclosure and/or repossession.

The final decree is the last document issued and it closes your bankruptcy case. You are no longer considered to be in bankruptcy once the final decree is issued by the court.

If you have received notice of a sale date on your home or another property you own, we strongly suggest you schedule a consultation as soon as possible, since there is considerable information needed to file your bankruptcy prior to the sale of the property.

It is unlikely a person will lose their house or car after filing Chapter 7 bankruptcy. However, there are two important factors that must be considered before filing Chapter 7 bankruptcy. First, are you current on your payments? Second, how much equity do you have in your house or car? If you are current on your payments and you do not have excess equity in your house or car, you should be able to file Chapter 7 bankruptcy and keep your house and car. If you have multiple cars in your name, you should speak with a bankruptcy attorney to determine if all the cars can be protected.

Generally, filing Chapter 7 bankruptcy will not reduce your payments on your car or home. If you keep your property you will be obligated to make payments. It may be possible to redeem your car which could possibly lower future payments.

If you purchased your car more than 910 days (2 ½ years) prior to the date you filed bankruptcy, you may be able to reduce that amount owed on the car to the value of the car based on National Automobile Dealers Association (NADA), plus a portion of the amount owed greater than the value. This is known as a cramdown. Use this time duration calculator to see if you have had your vehicle more than 910 days.

At this time, the bankruptcy courts do not have the power to reduce your loan amount or interest rate on your home. There is some discussion that this may change in the future with the President’s mortgage relief plan, but Congress would be required to pass the bill and the President would have to sign it.

The moment the bankruptcy is filed with the court an automatic stay goes into effect, stopping your creditors from proceeding with any legal actions against you including the placement of a lien on your property.

Yes, you can surrender your vehicle within a bankruptcy if you no longer want to keep it. Those filing bankruptcy do that regularly. By surrendering the vehicle you are going to wipe the debt out of your name so you are no longer liable for the debt. You would likely lose the vehicle when you surrender it.

Most personal property such as cash, bank accounts, furniture, clothes, and retirement plans can be protected by exemptions allowed by each state. Most people that file bankruptcy are allowed to keep most, if not all, of their personal property.

Most legitimate retirement accounts are protected from your creditors. Usually, the retirement account must be an IRA or an ERISA qualified retirement plan.

Income from the Social Security Administration is protected and is not included in the Means Test calculation and is not used in determining your disposable income moving forward in a bankruptcy.

You should list all leases. You may choose to assume (keep) or reject (give up) a lease in your bankruptcy. If you assume the lease you will be responsible for making payments and that debt will not be discharged or eliminated by the bankruptcy. A lease that is rejected will be listed as a creditor and that debt should be discharged in your bankruptcy.

Filing bankruptcy will not stop the garnishment of domestic support obligations for ongoing child support and alimony awarded by the court. However, domestic support arrearage, the amount you are behind, can be included in the Chapter 13 bankruptcy plan payments, so the wage garnishment may be reduced for that portion of the child support or alimony payment.

Filing Chapter 13 bankruptcy will stop the garnishment from the Internal Revenue Service and/or a state’s department of revenue for taxes.

Unfortunately, the wage garnishment will not stop until your employer receives paperwork from these entities instructing them to stop the garnishment.

Once the bankruptcy is filed, the automatic stay goes into place and creditors must stop contacting you as soon as they are notified of your case number. If the creditor calls you after notice has been provided, simply give them the information once again and make a note of the date, time and person’s name that called on behalf of the creditor. If the creditor continues to contact you, either in writing or by phone, you should contact your attorney’s office.

The address will vary depending on the Chapter 13 bankruptcy Trustee over your case.

Charlotte Office Clients

For Chapter 13 bankruptcy Trustees in the U.S. Bankruptcy Court for the Western District of North Carolina, you can verify the address for your payments by checking the Trustee’s website. The payments should be sent to the Lockbox Address for Debtor’s Payments.

• Warren L. Tadlock, Chapter 13 bankruptcy Trustee (Charlotte area)
• Steven G. Tate, Chapter 13 bankruptcy Trustee (Shelby and Wilkesboro areas)

Greensboro / Winston-Salem Office Clients

For Chapter 13 bankruptcy Trustees in the U.S. Bankruptcy Court for the Middle District of North Carolina, you can verify the address for your payments by checking the Trustee’s website. The payments should be sent to the Lockbox Address for Debtor’s Payments.

• Kathryn L. Bringle, Chapter 13 Bankruptcy Trustee (Winston-Salem)
• Richard M. Hutson, II, Chapter 13 Bankruptcy Trustee (Durham)
• Anita Jo Troxler, Chapter 13 Bankruptcy Trustee (Greensboro)

Each month the Trustee receives a payment from you, he will distribute payments to your creditors based on a priority as established by the Chapter 13 plan. If you do not make a payment to the Trustee, he will not distribute payments to your creditors.

The Chapter 13 bankruptcy Trustee may change your Chapter 13 bankruptcy plan payment when you attend your meeting of creditors if any creditor files a proof of claim with the court indicating the amount owed is greater than what you included in your bankruptcy. If the claim is considerably higher than anticipated, you may not have the disposable income to afford your Chapter 13 bankruptcy payments and the Trustee could file an Objection to Confirmation of your bankruptcy. Read more about when your Chapter 13 payment can change.

The Internal Revenue and/or state’s department of revenue will most likely stop the wage garnishment when they receive the notice of bankruptcy filing and notice of the automatic stay from the court.

If you file your taxes shortly before filing a Chapter 13 bankruptcy, the Internal Revenue Service and/or state’s department of revenue may not have your taxes recorded prior to your meeting of creditors. This may delay the approval of your bankruptcy or even cause the Chapter 13 bankruptcy Trustee to file an objection to confirmation of your bankruptcy.

While you are in bankruptcy, you are obligated to file and pay your taxes by the filing deadline. If you do not file your taxes while you are in a Chapter 13 bankruptcy, the taxing agency may estimate the taxes at an extremely high amount and add the estimated amount due to your bankruptcy and/or request your bankruptcy be dismissed by the bankruptcy court. If your case is dismissed, you will no longer be protected by the bankruptcy court and your creditors may take collection actions against you as well as proceed with foreclosure and/or repossession if warranted. If you file your taxes but do not pay the amount due while you are in a Chapter 13 bankruptcy, the taxing agency may add those taxes to your bankruptcy.

If you are obligated to pay ongoing child support, usually for a child under the age of 18, the wage garnishment for that portion of child support will continue. However, most agencies are willing to allow you to pay the arrearage or the amount you are behind through the Chapter 13 bankruptcy Trustee. As a result, your garnishment will most likely be reduced for the arrearage.

If you filed prior to July 1, 2009, you are responsible for making your mortgage payment, home equity line payment, real property tax payment, homeowners association dues payment and other payments to creditors that have a deed of trust on your home. Your payments become due the date of the next scheduled payment after your bankruptcy case is filed with the court – the date the court issues a case number. It is also important that you pay your homeowners insurance timely to avoid having the mortgage company add “forced-placed” insurance on your home. Forced-placed insurance is normally much higher than what you can obtain from your own insurance agent.

If you filed Chapter 13 bankruptcy on or after July 1, 2009, your mortgage payments will be included in your plan payment to the Chapter 13 Trustee. The exception will be for home equity lines of credit or HELOCs that you will pay directly to the company financing the loan, since the monthly payment may vary each month depending on the interest rate and loan balance. Your payment on the HELOC become due the date of the next scheduled payment after your bankruptcy case is filed with the court – the date the court issues a case number. If your property taxes and homeowners insurance are not escrowed into your mortgage loan payment, it is also important that you pay them timely to avoid having the mortgage company pay the taxes on your behalf or add “forced-placed” insurance on your home. Forced-placed insurance is normally much higher than what you can obtain from your own insurance agent.

If you file a Chapter 7 bankruptcy, the mortgage company for your home or the finance company for your car may stop sending bills or statements and they may no longer deduct your payment from your bank account. However, you should continue to make your mortgage payment and/or car payment if you want to keep these assets.

If your mortgage company refuses to accept your first payment after filing bankruptcy, either online or by returning your payment in the mail, you should try sending it to them through the mail again and keep copies of the correspondence/information you sent them plus a copy of the postmarked envelope. If they return the payment again, you should contact your attorney.

Our office strongly recommends you set up a file for payments made to your mortgage company and homeowner association. This will be very important should the mortgage company or homeowner association file a Motion for Relief from Automatic Stay, since there will be limited time to respond to the motion.

A reaffirmation agreement is a legally binding document filed with the bankruptcy court in which you agree to keep making payments on a debt. For example, you are required to sign a reaffirmation agreement if you would like to retain personal property, such as an automobile, and keep making payments after filing your bankruptcy. Learn more about reaffirmation agreements.

If you sign a reaffirmation agreement and then change your mind, you may rescind or cancel the reaffirmation agreement at any time before the bankruptcy court enters a discharge order, or before the expiration of the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever occurs later. To rescind a signed reaffirmation agreement, you must notify your attorney, the creditor and the court in writing. If you do not cancel or rescind the reaffirmation agreement under the correct court procedure, you will be responsible for paying the debt.

If you are in a Chapter 7 bankruptcy and plan to keep your home, you will need to bring the payments current immediately. Otherwise, the mortgage company may file legal paperwork with the bankruptcy court called a Motion for Relief from Automatic Stay asking the court for permission to foreclose on your home.

If you are in a Chapter 13 bankruptcy, the impact of getting behind on payments to the mortgage company will depend on when your bankruptcy was filed.

If you filed prior to July 1, 2009 and get behind on your house payments, the mortgage company will file a Motion for Relief from Automatic Stay for permission from the court to proceed with foreclosure. In some cases you, through your attorney, may be able to work out a repayment plan with the mortgage company for the amount you have fallen behind since filing your bankruptcy. However, there are no guarantees this will be possible. The bankruptcy court must approve the repayment plan agreement, known as a Consent Order.

If you filed on or after July 1, 2009, your house payments are included in the Chapter 13 plan payment. The only exception would be a home equity line of credit (HELOC). If you get behind on your Chapter 13 payments to the Trustee, the Trustee will likely file a Motion to Dismiss or Modify your bankruptcy. If your case is dismissed, the mortgage company may proceed with the foreclosure of your home.

If you get behind on your car payment while in Chapter 7 bankruptcy, the finance company may file a Motion for Relief from Automatic Stay requesting that the bankruptcy court allow the finance company to repossess the car. In most Chapter 13 bankruptcy cases, your car payments will be included in your payments to the Chapter 13 bankruptcy Trustee if you are purchasing the vehicle. If you are leasing the vehicle, you will make lease payments directly to the finance company. If you get behind in your payments to the Chapter 13 bankruptcy Trustee or to the finance company for leases, the finance company may file a Motion for Relief from Automatic Stay requesting that the bankruptcy court allow them to repossess the car.

A motion for relief from automatic stay is filed by one of your creditors after the bankruptcy has been filed. It is the legal process of the creditor requesting the court’s permission to proceed with legal action against you. This is filed by secured creditors such as a mortgage company or auto finance company, if you are not making payments to the Chapter 13 bankruptcy Trustee in a Chapter 13 bankruptcy.

It is possible to refinance your home while in bankruptcy, but you will need to obtain the bankruptcy court’s permission. You may want to start the process by seeking preliminary financing from a bank or mortgage company. At that point you should contact your attorney about filing the motion with the court to obtain permission. Keep in mind that most mortgage companies require Chapter 13 debtors to show a minimum of 12 months timely and consecutive payments to your mortgage company or companies and Chapter 13 bankruptcy Trustee before granting preliminary approval.

You will need to obtain court permission to sell your home or car during the bankruptcy process. This will require a motion to be filed with the court and an order signed by the judge. You should contact your attorney to discuss the process and time frame for obtaining court approval.

Whether the vehicle is being purchased or leased will have some impact on the answer. However, it is important you contact your bankruptcy attorney’s office right away to determine how you will need to proceed. If you are in a Chapter 13 bankruptcy and need to obtain a new vehicle, you will need to work with your attorney to complete the paperwork necessary to obtain the Chapter 13 bankruptcy Trustee or court’s approval.

If you lose your job while in a Chapter 13 bankruptcy, you should contact your attorney to discuss the likelihood of securing another job soon, whether you are receiving unemployment or other income. The attorney can provide options to you given your specific situation.

It may be possible to modify your Chapter 13 bankruptcy plan payments or file a Motion for Moratorium depending on the amount of time you will be out of work or on a reduced income. Unfortunately, not all clients may be eligible for a modification. Your attorney will work with you to identify the option(s) that will work best for you.

If you filed prior to July 1, 2009, it may be possible to file a Motion for Moratorium and obtain the court’s permission to stop making Chapter 13 bankruptcy Trustee payments for a few months. This is a short break to give you time to get back to work. It is possible your Chapter 13 bankruptcy plan payments will need to increase once you begin making payments again, since this is not necessarily a forgiveness of those payments but basically a deferment. If you filed on or after July 1, 2009, it is less likely that your creditors and the Court will agree to a moratorium on your payments.

Workers Compensation and person injury settlements are exempted in North Carolina under the General Statutes. However, you will need to file a motion with the court to obtain approval to settle the claim on the workers compensation or personal injury settlements.

Your payments are usually increased when you have failed to make payments to the Trustee, the mortgage company increases your house payments due to a change in your interest rate or escrow and/or you have additional claims filed in your bankruptcy. Additional claims may be for taxes you have failed to pay to the city, county, state or Internal Revenue Service after filing your bankruptcy.

In addition, the Trustee will pay attorney fees for items outlined in the Disclosure to Debtor(s) of Attorneys Fee and approved by the Court. This schedule was part of the bankruptcy contract and also included in your bankruptcy filed with the Court.

To obtain an estimate of the amount owed in your bankruptcy you may register with the National Data Center. You will be able to obtain a login and password that allows you to access your account. Should you need an “official” payoff, you must obtain that through your attorney’s office.

The courts made the payment of child support and alimony a high priority in the 2005 bankruptcy law. If you get behind on your payments after filing bankruptcy, the family law court has the right to take all actions available to them including summoning you to court and even incarcerating you.  You may not be eligible for a discharge from bankruptcy if you are not current on your domestic support obligations.

If you discover while in a Chapter 13 bankruptcy that you can no longer afford to make payments to the Chapter 13 bankruptcy Trustee due to the loss of employment, change in income, etc., you may qualify to voluntarily convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy. You may also decide to convert your Chapter 13 bankruptcy to a Chapter 7 bankruptcy if you decide you no longer want to keep your home or car. You should contact your attorney to discuss whether you are eligible to convert to a Chapter 7 bankruptcy. Under certain circumstances, the Chapter 13 bankruptcy trustee may recommend that your case be involuntarily converted to a Chapter 7 bankruptcy.

If you get behind on house or car payments while in a Chapter 7 bankruptcy and risk losing the property, you may convert your Chapter 7 bankruptcy to a Chapter 13 bankruptcy as long as you meet the qualifications to file a Chapter 13 bankruptcy, primarily having sufficient income to make the plan payments under Chapter 13 bankruptcy.