What if Creditors Keep Calling After I’ve Filed Bankruptcy?

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When you file bankruptcy, an “automatic stay” goes into effect against all of your creditors. The automatic stay, Section 362(a) of the U.S. Bankruptcy Code, among other things, prohibits creditors from contacting you to collect a pre-petition debt. In short, no more harassing phone calls from your creditors! This is one of many advantages the law offers to individuals who file Chapter 7 bankruptcy or Chapter 13 bankruptcy.
Smartphone IconAll of the creditors listed in your bankruptcy will receive notice within 5 business days when your bankruptcy petition is filed. This notice is sent to every creditor, both electronically and by mail. Generally, most creditors will stop all collection attempts immediately after they receive notice of the bankruptcy.

Should you receive phone calls from any of your creditors after you’ve filed bankruptcy be sure and let the creditor know you filed bankruptcy and provide them with your case number, the filing date and the name and phone number of your attorney. It is important that you document all of the phone calls you receive from the creditor by writing down the date and time you receive the calls and the name of the person you talked to. If a creditor continues calling you after you’ve informed them of your bankruptcy filing, they are in violation of the automatic stay and you should contact your attorney to let them know. Most likely your attorney will call the creditor and give them a courtesy warning to stop making contact with the debtor. At that point, if the creditor continues with their collection efforts by calling or sending you bills, your attorney may choose to file sanctions against the creditor for violating the automatic stay.

Can I Keep My Car Lease if I File Bankruptcy?

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When filing bankruptcy you have the option to continue to pay for your car lease payment or you can opt out of your car lease payment.  In a bankruptcy you can legally be released from many of your contractual obligations, this includes things like cell phone contracts, apartment leases, and even a car lease.  In a Chapter 7 bankruptcy those debts will be wiped out. In a Chapter 13 bankruptcy you will pay back only a portion of the total amount owed.

For example, John Doe has one year left on a car lease and is paying $300 a month.  If he does not want to continue the lease and at the time of filing a Chapter 7 bankruptcy he will return the car (after speaking with his bankruptcy attorney first) and will no longer be responsible for that $300 payment each month. Therefore, the additional $3,600 that John Doe would have paid through the end of his lease will be included in his bankruptcy.  In a Chapter 7 bankruptcy the $3,600 will be wiped out. If, instead, John Doe were filing a Chapter 13 bankruptcy then he would be responsible for a portion of the remaining balance.

There are some important things to consider before deciding not to continue the lease. First, and probably the most obvious, is that you will need to return the car.  If that car is your family’s only means of transportation and is a reasonable lease you may want to think twice before surrendering the lease into the bankruptcy.

Another factor to consider is if anyone else’s name is on the lease.  If you and your mother, or boyfriend/girlfriend etc. have both signed the lease then once you release that lease into bankruptcy that other person becomes solely responsible for the financial obligations of that lease.  For example, if John Doe is filing a Chapter 7 bankruptcy and his mother has co-signed the lease with him, she will be solely responsible for the lease payments if he surrenders the lease.

There are a number of things to keep in mind when deciding whether or not to keep your car lease when filing bankruptcy. It is important to know your options and to understand that you can surrender the lease if it is in your best interest.  If you chose to keep the lease then you would just continue your monthly payments as usual. As long as you are current on all payments most things in the lease would remain the same.

Do I Need an Attorney to File Bankruptcy?

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The law does not require a person to hire an attorney to file bankruptcy.  The bankruptcy can be filed “pro se” where you represent yourself.  However, an individual is taking a risk by not hiring an experienced attorney to navigate the court system and to ensure the paperwork is prepared correctly.

It is extremely important that all schedules required by the bankruptcy court are properly prepared and filed with the court in a timely manner.  The bankruptcy court may dismiss the bankruptcy case if schedules are missing.  In addition, an individual risks losing their assets – cash, houses, cars, businesses, etc. – if the bankruptcy paperwork is not prepared in a way that fully protects the filer’s assets. Read more

Do I Still Have to Make Mortgage Payments While I’m in Bankruptcy?

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Once you decide to file Bankruptcy, whether it is a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will need to decide if you intend on keeping your home.  If you qualify for a Chapter 7 bankruptcy filing and you wish to keep your home, you will need to be current with your mortgage payment(s) and your homeowners’ association dues at the time of filing.  As per federal bankruptcy law, you must remain current throughout the duration of the bankruptcy; this includes first, second, third mortgages attached to the home, as well as, your homeowner’s association dues.  If you fail to keep current with your mortgage payment(s) or your homeowners’ association dues, the “relief from stay” can and most likely will be lifted and the mortgage company or the homeowner’s association may initiate foreclosure proceedings on the home.

Family in Front of House

In a Chapter 13 bankruptcy filing, you will make monthly payments to the Trustee’s office.  The Trustee will then distribute those funds to your creditors.  The creditor payments are according to priority deemed by the Bankruptcy Court.  Your mortgage lender is almost always one of the creditors at the top of the list.  Therefore, you will not be making direct payment to your mortgage lender if you are behind on payments.  This payment will be included in your Chapter 13 payment plan and the Trustee’s office will make the mortgage payment from the funds you send each month.   An exception would be your homeowners’ association dues, which you will continue to make payment directly to the homeowners’ association.  Also, in some districts if you are current on your mortgage payment the Trustee will allow you to make direct mortgage payments to the mortgage company.

Regardless of which type of bankruptcy you plan to file, if you want to keep your house you will need to continue to make your mortgage payments and stay current on your payments.

Will My Payments Change in a Chapter 13 Bankruptcy If I Lose My Job?

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Can I Keep Multiple Vehicles in a Bankruptcy?

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Yes, most of the time.  The federal bankruptcy laws allow you to protect certain property by using state exemptions to protect the automobiles.  However, you can only protect up to a certain amount of equity in a vehicle.  For example, North Carolina allows you up to $3500 in a motor vehicle exemption to protect one vehicle per person filing bankruptcy.  Therefore you can have a vehicle that is bought and paid for to have a value up to $3500 using the motor vehicle exemption and protect the vehicle.  What if you have two vehicles titled in your name that are paid in full and have a total value of $6000?  Generally speaking you cannot protect, in full, both vehicles unless you have some “wildcard” exemption left over to use to help protect the second vehicle.  This wildcard exemption will be discussed on another topic, but it usually allows $5000 per person filing the bankruptcy to protect “other” property.  However there are exceptions, so check with an attorney at Duncan Law for specific advice.

Frequently Asked Bankruptcy Questions

Another unusual scenario is you hypothetically have ten brand new 2011 Mercedes each worth up to $100,000 each. However, you owe $100,000 on each vehicle.  Therefore you have no equity in the ten vehicles. With no equity in the vehicles, you can have ten new Mercedes worth one-million dollars and be able to keep all the vehicles, as long there is no equity and you continue to make you payments on the vehicles.  This is usually valid in a Chapter 7 bankruptcy, however most Chapter 13 bankruptcy Trustees will not allow you to keep excessive vehicles that you do not need.

What if you have an old run down 2000 Mazda that is paid off in full, worth only $4500.  Remember, without your wildcard exemption you can only protect $3500 in value.  Therefore you have $1000 in excess equity and the Chapter 7 could seize the vehicle and sell it.  You would get the first $3500, the Trustee would receive anything in excess of $3500.

In conclusion, it doesn’t seem fair, you could lose the one old car that is paid for, but keep the ten new Mercedes since there is no equity in the vehicles. That’s why you need help from Duncan Law.

Who is the Bankruptcy Administrator? | North Carolina

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In North Carolina, when you attend your creditors’ meeting you will see a number of different types of “court” officials. The creditors’ meeting isn’t really a court hearing but it is somewhat similar to court. The main types of representatives at the creditors meeting are the Debtor and Debtor’s attorney, any potential creditors, the Trustee and the Bankruptcy Administrator or someone from the Bankruptcy Administrator’s office.

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The Debtor is the person who owes money, the creditors are the people who money is owed to and the role of the Trustee has already been discussed. According to the Federal Courts, the Bankruptcy Administrator or their designated representatives’ job in North Carolina is to, “oversee the administration of bankruptcy cases, maintain a panel of private trustees, and monitor the transactions and conduct of parties in bankruptcy.”

In other words, the role of the Bankruptcy Administrator is to ensure creditors’ meetings run smoothly and any potential conflict between the Trustee (representing the creditors) and the Debtor and the Debtor’s attorney is kept to a minimum. This usually isn’t a problem since the creditors’ meetings tend to be non-adversarial meetings.

Also, the Bankruptcy Administrator has the ability to ask questions at the creditors’ meeting. Generally speaking, the Bankruptcy Administrator’s office will ask questions if your case is being converted from one type of bankruptcy to another or if they believe the Debtor(s) do not fall below the Means Test.

The Bottom Line: The Bankruptcy Administrator’s office handles administrative matters throughout the bankruptcy process.

Who Will Find Out That I Filed Bankruptcy?

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A lot of people are concerned with who will find out about their bankruptcy if they choose to file bankruptcy. That is a legitimate and understandable concern. Once a bankruptcy petition has been filed with the court it becomes public record.  If a person is determined enough, the information can be obtained.  However, to find out if someone has filed for bankruptcy the person would need to sign up for an account on PACER (Public Access to Court Electronic Records) and could be required to pay money to view the necessary information. For the most part, the only people that will be notified of the bankruptcy are the people that you are in debt with and/or owe money too.

Family Walking Holding Hands

Understandably, the main concern for people is family and friends finding out about their bankruptcy.  The only way that they will be notified of your bankruptcy is if you owe money to them.  They will have to be notified under federal law as creditor.  Also, if you are paying child support and/or alimony the recipient will have to be notified of your bankruptcy.  The reason for this is if you were to fall behind on a payment with child support and/or alimony then that could affect the outcome of your bankruptcy.

Another concern that clients have is if their employer will be notified.  They payroll department of your employer will likely be notified in a Chapter 13 bankruptcy because at least a portion of your monthly payment will be deducted from your paycheck. In a Chapter 7 bankruptcy there is no reason the employer would find out about the bankruptcy unless they pulled your credit report.

Again, it is rare that people would be able to find out if you have filed bankruptcy. Unless you choose to tell people about your bankruptcy, most people will never find out.