What if I Accidentally Leave a Creditor Off of My Bankruptcy?
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Under the stress of a bankruptcy filing, there are times when a creditor is inadvertently forgotten and left off of a bankruptcy filing. If you file Chapter 7 bankruptcy or Chapter 13 bankruptcy and realize that you accidentally left a creditor off of your bankruptcy, it may not be too late.
If you realize before your creditors’ meeting that you have omitted a creditor, you will need to contact your attorney immediately. Generally speaking, you can add a creditor before your creditors’ meeting. Your attorney may charge a small fee and the court will charge a filing fee, but for most debtors these fees are insignificant compared to the amount owed to the omitted creditor. Your attorney will also send out the proper notices to the omitted creditor after the creditor has been added to the bankruptcy filing.
If you realize after your creditors’ meeting that you have omitted a creditor, there are more strict time limitations to adding a creditor and you will need to contact your attorney immediately to determine whether or not the time frame for you to add a creditor has lapsed.
The most important way to avoid accidentally omitting a creditor from your bankruptcy prior to the filing of your petition is to double-check your credit report from each of the three main credit reporting agencies: Equifax, TransUnion, and Experian (visit www.AnnualCreditReport.com to get your free credit report). You will also want to double-check your bills from your creditors to make sure that you have included all of your debts on your bankruptcy petition.
How Much Debt Can I Have When I File for Bankruptcy?
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Every potential bankruptcy client has a different amount of debt owed. Even the type of debt varies from debtor to debtor – some debtors have almost all credit card debt, while others may have almost all medical bills. A common question that potential bankruptcy clients have is whether their bankruptcy will be denied by the Court if they owe “too much money.”
For potential Chapter 7 bankruptcy clients, there is not a specific limit to the amount of debt that can be owed. However, the Bankruptcy Court will always do an analysis in each case to examine the amount of household income in relation to the amount and type of debt owed to ensure that the debtor is not abusing the bankruptcy system.
For potential Chapter 13 bankruptcy clients, there are some limitations to the amount of debt that is allowed. Under Section 109(e) of the Bankruptcy Code (also known as the federal bankruptcy laws), an individual with regular income cannot owe more than $250,000.00 in unsecured debt and $750,000.00 in secured debt. In some bankruptcy courts, the bankruptcy Judge will hold a hearing for confirmation of your Chapter 13 Plan if there is more than $100,000.00 in consumer debt (credit cards and personal loans). These limitations are set to ensure that the debtor is not abusing the bankruptcy laws.
One way to avoid having issues with the amount of debt you owe is to stop using your credit cards as soon as you consider filing bankruptcy. In some cases, the Court may ask you when the last time you used your credit cards was. The Court asks this question to make sure that you did not run up your credit card charges immediately before filing bankruptcy.
You should contact a Charlotte bankruptcy attorney or Greensboro bankruptcy lawyer to get a more specific analysis of your own situation, but you can use these general guidelines to prepare yourself for whether or not the court will deny your bankruptcy if you owe “too much money.”
Will Bankruptcy Stop Creditor Phone Calls and Harassing Contact?
Yes, once a person has case number after filing either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, a creditor is prohibited from trying contact the debtor in any attempt to collect a debt.
Can I Get Fired From My Job For Filing Bankruptcy?
The short answer is, no. Federal law prohibits an employer to discriminate against you for your declaring bankruptcy. According to 11 U.S.C § 525 (a) and (b), no governmental unit or private employer may “…terminate the employment of, or discriminate with the respect of employment someone who is or has been a debtor under this title…” In other words, you can’t be fired from your job simply because you have filed for bankruptcy.
Can I Eliminate a Second or Third Mortgage by Filing Bankruptcy?
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If you are like many people, your home is not worth what it was a few years ago. With the downturn of the economy, the value of your house has decreased. Suddenly, you are “upside down” on your home and the sales price is not enough to pay off the first, second and sometimes third mortgage on your home.
When the real estate market was strong, many people capitalized on the fact that their home was worth more than their first mortgage and obtained second and even third mortgage loans against their home. Often this money was used to pay off credit cards or medical bills, and in some cases it was used to update or upgrade the home. Regardless, the house is not worth what you owe on it today, and there is no way for you to sell the home without a short-sale or possible deficiency balance.
If the value of your home is less than what you owe on your first mortgage, you may be able to file Chapter 13 bankruptcy in a North Carolina bankruptcy court and “strip” the lien of the second mortgage. In other words, if you file Chapter 13 bankruptcy you may be able to either file a lawsuit (adversary proceeding) or file a Motion to Value Realty and eliminate a great deal, if not all, of the amount owed on the second and/or third mortgage. Obviously, the mortgage company has the right to argue the value placed on the property. However, if you have obtained a market assessment by a licensed real estate agent or an appraisal by a licensed appraiser, it will be more difficult for the mortgage company to argue the value.
The adversary proceeding or Motion to Value Realty must be filed in addition to your Chapter 13 bankruptcy case. For the lien of the second and/or third mortgage to be “stripped” or voided, you must have a bankruptcy court order canceling the lien on the second and/or third mortgage and you must receive a discharge in your Chapter 13 bankruptcy.
If you have questions on how you may be able to “strip” a lien on your home by filing Chapter 13 bankruptcy, please do not hesitate to contact us.
Should I Stop Using Credit Cards If I’m Going to File Bankruptcy?
Generally speaking, yes. It is not mandatory to stop using your credit cards before filing for bankruptcy but you should use them wisely and, ideally, you should stop using them. If charges to your credit cards have been made to purchase luxury items within 180 days prior to you filing the bankruptcy you would need to wait to file.
What to Expect at the Creditors’ Meeting
Whether you are filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, you will be required to attend a creditor’s meeting (also known as a 341 Meeting of Creditors). The Court schedules the date and time of your creditors meeting after your bankruptcy has been filed and a bankruptcy Trustee has been assigned to your case.
Will I Lose My Retirement If I File for Bankruptcy?
Generally speaking, no. However, there are always exceptions.
Most retirement plans are ERISA qualified, which stands for Employee Retirement Income Security Act of 1974. This law was enacted to protect your retirement accounts from risky investments by your employer or plan administrator. If the plan is ERISA qualified, then your bankruptcy Trustee cannot seize your retirement money to pay your creditors.
Can I File Bankruptcy for Someone Else If I Have a Power of Attorney For Them?
Situations often arise where a potential bankruptcy client is hospitalized, out of town or out of the country, or otherwise unable to sign the necessary paperwork or appear at the necessary court dates for a bankruptcy filing. Often, these potential bankruptcy clients have a valid Power of Attorney document allowing a loved one to sign important papers on their behalf. The question is, can a loved one use a Power of Attorney to file a bankruptcy on behalf of another person?
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Generally, most Power of Attorney documents are drafted using standard language that includes real property transactions, banking transactions, insurance transactions, etc. Most Power of Attorney documents do NOT, however, include “bankruptcy transactions.” In North Carolina, and in many other courts, the Bankruptcy Court will only accept a Power of Attorney if the Power of Attorney document specifically names “bankruptcy” as an included transaction. In other words, if the document does not say the word “bankruptcy filings and related matters” or similar language, then the Bankruptcy Court will not accept the Power of Attorney and the bankruptcy will be dismissed.
An example of this would be the following case: An elderly couple has fallen behind on their mortgage payment. They have lived in their house for almost fifty years and have refinanced a few years ago. Due to circumstances involving hospital stays and nursing home stays, the couple has been unable to make their mortgage payment and the house is in foreclosure. In order to save their home they are considering filing for a Chapter 13 bankruptcy. The couple’s daughter is the Power of Attorney for both the mother and the father. The mother’s Power of Attorney document specifically includes the words “bankruptcy filings” but the father’s Power of Attorney does not. The daughter, as the Power of Attorney for both her mother and father, files a joint bankruptcy petition on their behalf in order to save the home. It is likely in this case that the father would be dismissed from the bankruptcy because the language in his Power of Attorney document did not include the word “bankruptcy.”
If you or a loved one is considering bankruptcy and/or considering having a Power of Attorney document created, it is important to include bankruptcy in the Power of Attorney document. You will need to speak with the lawyer preparing the Power of Attorney document to ensure that the necessary language is included.
If the Power of Attorney document has already been created and does not include the proper language, there are a couple of options. First, a new Power of Attorney document could be created that includes the proper language. Second, you could speak with a bankruptcy lawyer about how the bankruptcy could be filed without a Power of Attorney. This option would require the presence and competence of the actual debtor.
