Bankruptcy Lawyers in Charlotte, NC Area See 6% Increase in Filings

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Charlotte NC SkylineThe decline in the national economy is reflected by an increase in personal bankruptcy filings in 2010. However, in North Carolina, bankruptcy filings increased in some parts of the state while they decreased in other areas of the state.

In 2010, national filings were up 9% from 2009. In 2010, there were 1,530,078 consumer bankruptcy filings, an increase from the 1,407,788 consumer filings in 2009.

At the local level across North Carolina, the number of bankruptcy filings in 2010 varied.

In the Western District of North Carolina, there were 8,450 new bankruptcy filings in 2010, up from the 8,238 filings in 2009 – an increase of approximately 2.5%. The Western District of North Carolina includes Asheville, Bryson City, Charlotte, Shelby, and Wilkesboro (and areas in between).

Specifically within the Western District of North Carolina, bankruptcy cases filed in Charlotte, NC were up approximately 5.7% in 2010, with 3,839 cases filed. In 2009, there were 3,631 new bankruptcy cases filed in the Charlotte division. These numbers reflect the ongoing financial difficulties that families are facing in the Charlotte area. Many of these bankruptcy filings were a direct result of a job loss or pay cut.

Within the Middle District of North Carolina, which includes Winston-Salem, Greensboro, and Durham (and areas in between), bankruptcy filings decreased 4.9% in 2010.

Why the difference in two sections of the state so geographically close? It is likely because of the varying job availability and varying housing markets. The housing markets are different from county to county. While people in the Charlotte area may be choosing to file Chapter 13 bankruptcy to stay in their homes and avoid foreclosure, the trend in Greensboro may be to not try to save the home and to instead surrender the home and later file bankruptcy. However, folks in the Greensboro area who are simply walking away from their homes will eventually be harassed and possibly sued by the mortgage company for any remaining balance due on the home. At this point, those individuals will need to file bankruptcy to eliminate their responsibility on the debt.

If you are in the Charlotte area and are considering bankruptcy, contact Duncan Law for a free, no strings attached consultation to learn more.

Who Is Considered A Dependent In Bankruptcy?

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Boy Holding HandsA dependent is an individual who requires and is actually receiving financial support from the debtor on a regular basis. This is usually children, grandchildren or an elderly family member. Generally, if you provide more than half of that person?s support, that person is considered your dependent.

When it comes to bankruptcy, the rules relating to whether or not a person can be claimed as your dependent are complex. There are various opinions on this topic and often times are determined on a case to case basis. Some Courts determine who is a dependent on the basis of who qualifies under the IRS standards while others use different standards. Most of the time, if they are considered dependents on your taxes the the bankruptcy courts will also consider them dependents.

The number of dependents you have is important in bankruptcy filings because it plays an important role in your Means Test calculations. Properly determining who is or is not a dependent may mean the difference between filing a Chapter 7 bankruptcy or having to file a Chapter 13 bankruptcy.

If you are uncertain as to whether an individual qualifies as your dependent, your best bet would be to consult with your bankruptcy attorney.

Does Your HELOC (Home Equity Line of Credit) Have You Locked?

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A few years ago when your home had equity, you obtained a Home Equity Line of Credit or HELOC to consolidate your debt and payoff credit cards, medical bills, personal loans, etc.  It seemed like a great idea because you could eliminate all of your revolving debt and make only two payments each month…your first mortgage and your HELOC payment.  This approach also provided a way to lower your monthly payment, since the interest rate on the HELOC was less than what you were paying on credit cards.  And we all thought at that time your home would appreciate in value!

Family Walking Holding HandsThat was circa 2008 and here you are in today.  You are lucky if your home is worth what you owe on the first mortgage, there’s no way will it will cover the HELOC.  So your HELOC has you locked!  What are your options?

Do absolutely nothing – You can see what is the HELOC creditor is going to do.

The HELOC creditor could foreclose on your home but probably not, since they would receive little if anything from the sale.  However, your credit will be negatively impacted because of late, slow or no payments on the HELOC.  The impact on your credit will make it difficult for you to obtain other credit for another car or other needs.

The HELOC creditor may actually decide to foreclose on the property.  They know they will receive little or nothing from the foreclosure, but they can write-off the bad loan from their books making the company more financially sound.

The HELOC creditor may write-off the debt on the loan and send a 1099C to you and the Internal Revenue Service.  It appears that this voluntary non-payment is excluded from the Mortgage Forgiveness Debt Relief Act of 2007.  At this point you will be responsible for taxes on the forgiven debt.  You should also remember that the creditor writing off the debt does not eliminate the lien by deed of trust on your home.  If you try to sell the house in the future, you must still deal with the HELOC creditor before you can convey the deed to another person.

Sell the home – You would sell the home, but you can’t get enough to pay the first mortgage and the HELOC.

You’ve talked to the HELOC creditor about a short-sale, and they want you to come to the closing table with at least some money to pay them.

Since you don’t have the money at closing, they have agreed to release the lien for you to sell the house, but they want you to sign an unsecured loan on at least a portion of the debt you owe them.  That is an option, but do you really want to pay for a house you do not own?  If you default on this unsecured loan in the future, they can actually sue you for the unpaid debt.

Chapter 13 bankruptcy – You can file a Chapter 13 bankruptcy to resolve the HELOC and any other outstanding debt.

The key is that your first mortgage must be greater than the value of your home.

You will be required to file a lawsuit or adversary proceeding in bankruptcy against the HELOC creditor.

You must complete your bankruptcy and receive a discharge.

This approach will allow you to retain your home and make it a more valuable asset, since you will no longer be saddled with the HELOC.

We you speak with your accountant or a bankruptcy attorney to determine what option is best for you.

What Happens When I Surrender My Property in Bankruptcy?

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What Steps Do I Take to Obtain a Loan Modification?

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Family in Front of HouseIt is possible to obtain a loan modification even if you have filed bankruptcy.  At this time, most mortgage companies would rather work out a loan modification agreement, if viable, than to foreclose on your home.  The last thing most mortgage companies want is another vacant house!

Steps to Follow:

Step #1: You should contact your mortgage company and express your interest in obtaining a loan modification. If you are in bankruptcy, they may indicate that your bankruptcy attorney must provide a release form before they will agree to speak with you.  If that should occur, contact your bankruptcy attorney to obtain the authorization letter.

Step #2: After receipt of the authorization letter, the mortgage company will send a package of materials for you to complete as well as request that you provide income tax returns, paystubs, and other relevant information.  You should complete the paperwork in its entirety and provide all the information the mortgage company requested.  If you do not thoroughly complete the package or fail to provide additional information they requested, the mortgage company may reject your request for a modification or it may slow down the process.

Step #3: Before you submit the package to the mortgage company, Duncan Law recommends you make a copy of your completed package. This will come in handy if the mortgage company has specific questions or indicates they did not receive a document in your package.

Step #4: We also recommend you send your loan modification package to the mortgage company either overnight mail or certified mail so that you can track your package and be sure it was received by the mortgage company.  Often the mortgage company will provide an overnight envelope for mailing the loan modification package.  Be sure to keep your receipt so you can track the package.

Step #5: Now is the hardest part…waiting for a response.  Each mortgage company is different when it comes to the timeline for responding on the loan modification.  Some mortgage companies indicate they will respond in three to four months, others indicate it can be up to one year.  It does not hurt to be the “squeaky wheel”.  If you haven’t heard from the mortgage company, you may want to follow-up every two weeks.  Do not be surprised if the mortgage company requests additional information.

Step #6: Once you are approved for a loan modification, you may need to contact your bankruptcy attorney.

If you are in an active Chapter 7 bankruptcy, you should contact your bankruptcy attorney to see if it is necessary to obtain the Court’s approval of the modification agreement.

If you were in a Chapter 7 bankruptcy and your case has been completed, a final decree has been issued, it is not necessary to contact your attorney.  You do not need approval to can sign the documents with the mortgage company.  However, you may find it helpful to retain a real estate attorney to review the modification agreement.

If you are in an active Chapter 13, you should contact your bankruptcy attorney.  It will be necessary for the bankruptcy court to approve the loan modification agreement.  Your bankruptcy attorney will need the terms of your modification agreement so they may file a Motion to Incur Debt.  It takes approximately 30 days to obtain approval of the loan modification from the bankruptcy court.   You should work closely with your bankruptcy attorney through this process.

If your Chapter 13 bankruptcy has been dismissed or discharged, it is not necessary to obtain the bankruptcy court’s approval.  You may work directly with the mortgage company, but again, you may want to seek the advice of a real estate attorney.

Again, it is important to be thorough in completing your loan modification paperwork, and persistent in your follow-up and interactions with the mortgage company.  Good luck in your efforts to obtain a loan modification with your mortgage company.

How to Write a Cease and Desist Letter

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If you are currently suffering from some type of creditor harassment or dispute and you believe that if the matter went in front of a judge that you would win the dispute, writing a cease and desist letter may be a good option for you.

A cease and desist letter is a letter that may be written by anyone – not just a lawyer – in an attempt to stop some sort of harmful activity (usually harassment or a dispute by a bill collector). Cease and desist letters are usually used when the matter is not serious enough to spend money taking the other party to court. Although cease and desist letters are usually written by lawyers, they are not required to be and can certainly be written by an individual who is not a lawyer.

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Usually, a cease and desist letter threatens further legal action if the harmful harassment or dispute does not end immediately. For example, if debt collectors are constantly harassing you, you can write a cease and desist letter. The information you include in your letter should be:

The name and address of the person you are contacting

The name and address of the party who is harassing you or against whom you have a dispute

A description of the harmful actions that the other party has taken against you (harassing phone calls, harassing letters, etc. – be as specific as possible, including dates, times, people’s names, etc.)

A specific demand that the actions stop immediately

A statement that if the actions do not stop immediately, further legal action will be taken (you can be as specific here as you would like – lawsuit filed in a certain court, certain damages will be sought, etc.)

It is also a good idea to send the letter via certified mail, return receipt requested, so that someone will have to sign off on receipt of the letter. That way, the other party cannot argue that they never received your letter. If you send the letter via regular mail, the other party may argue that they never received your letter or that it was lost in the mail.

Although some people do hire attorneys to write a cease and desist letter on their behalf, it can definitely be done by an individual who is not an attorney – just be sure to include all necessary information and be stern in your demands. Here is an example of a Sample Cease and Desist Letter.

Will My Children’s Privacy Be Protected If I File Bankruptcy?

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