Does Filing for Bankruptcy Lower My House or Car Payment?

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Depending on which bankruptcy you file, bankruptcy may lower your monthly payments for a car but will not lower your payments for a house.  A Chapter 7 bankruptcy will not lower your monthly payments but you will be wiping out all of your other debts and will no longer be charged interest and late fees on those payments. Therefore, you free up more money each month which helps your ability to make your car or house payments each month.  If you still feel like there is no way that you would be able to afford to make the payment each month, then you can surrender your vehicle or house and wipe out any mortgage or car loan that is left over.

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In a Chapter 7 bankruptcy, once you file, your secured creditors will want you to sign what’s known as a reaffirmation agreement.  A reaffirmation agreement tells that creditor that you will continue to make your payments as contracted.   In a Chapter 7 bankruptcy, you are not required to sign a reaffirmation agreement on your home, but you must sign one in order to retain your vehicle.  In either case, you must continue to make your monthly payments, and upon default, they have the right to foreclose or repossess the property.  Now, there are some cases in which you can redeem your car instead of reaffirming it, but you will need to discuss this with your attorney.

In a Chapter 13 bankruptcy, the trustee will be making your house and vehicle payment through the bankruptcy plan.  As with a Chapter 7 bankruptcy, your mortgage payment will be the same as it was before you filed the bankruptcy.  There is no way to “get around” this unless you refinance your home, in which you will need to obtain permission from the court to do so once you have filed the bankruptcy.  If your vehicle is over 910 days (2 ½ years) before the date that you filed the bankruptcy, you may be able to do what’s known as a “cramdown”.  If your loan balance is higher than what your vehicle is worth (the court will usually determine the value based upon NADA), then you can pay back the vehicle based upon what it is worth rather than the contracted loan balance.  This option is only available in a Chapter 13 bankruptcy though.  If it was purchased within the 2 ½ years before you filed, you will pay back the amount that is contracted in your Chapter 13 plan.

Therefore, bankruptcy may lower your car payment through a “cramdown”. However, it you will not be able to lower your monthly house payment through a bankruptcy. If you are behind on your house payment you could potentially file a Chapter 13 bankruptcy which will help you pay back the arrearages, or amount owed, but it will not actually lower your mortgage payment.

What Types of Debts Cannot Be Wiped Out in Bankruptcy?

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Whether filing for a Chapter 7 bankruptcy or Chapter 13 bankruptcy, there are certain debts that you may not discharge when filing your petition.  These debts include the following:

Federal taxes and state taxes are typically not wiped out in bankruptcy. Any type of lien issued by the government is not eligible to be discharged through the bankruptcy.  We will include your debt in the bankruptcy petition so that the State of Federal authority will be notified of your filing.  It is your responsibility to contact the IRS or State to make payment arrangement.  If you fail to pay your current tax bill or repay your back taxes, the State or IRS would likely put a lien on your home or another asset that you own.  However, there are certain times where taxes may be wiped out. However, it is very rare that you will be able to have taxes wiped out.

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Government loans such as federal student loans cannot be discharged through bankruptcy and must be paid back, in full, to the agency that issued the loan.

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Court ordered domestic support obligations may supersede the Bankruptcy filing.  For instance, if you have a court ordered child support or alimony payment already in place with the Court, this payment is not a viable debt to be discharged in bankruptcy.  If you fail to make these payments, the Court may garnish your wages in order to collect the debt.

Any debts incurred AFTER you have filed your bankruptcy petition may not be wiped out. You may not incur additional debt and then contact your attorney requesting that the debt be added to your bankruptcy filing.  This is fraud and could result in further legal action.

Debts incurred within ninety (90) days of filing your petition are closely scrutinized by the Bankruptcy court and may not be eligible for discharge with your Bankruptcy filing if they are deemed to be fraudulent. If you go out and purchase items on a credit card, knowing that you were then going to file bankruptcy, the debts will not be wiped out.

Can My Chapter 13 Bankruptcy Payment Change?

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The bankruptcy law allows Chapter 13 bankruptcies to last anywhere from three to five years. If you are required to file a Chapter 13 bankruptcy because you do not pass the Means Test, then your Chapter 13 repayment plan is required to be for 60 months, unless you can afford to repay 100% of your unsecured debt in less than 60 months.

Often, Chapter 13 bankruptcy debtors are apprehensive of their Chapter 13 payment for fear that over the course of three to five years, their job situation may change. It is common for people to ask, “Will my Chapter 13 payment change during my bankruptcy?”

There are two ways to answer this question:

1) Whether your Chapter 13 payment will increase during your bankruptcy, and

2) Whether your Chapter 13 payment will decrease during your bankruptcy.

Bankruptcy Questions

First, let’s discuss whether your Chapter 13 payment will increase during your bankruptcy. The bankruptcy Trustee has the ability to examine your pay stubs, bank statements, and tax returns at any time during your bankruptcy. Usually, the Trustee will do a review of your case annually. If, for example, you receive a major pay increase during your bankruptcy, the Trustee may increase your plan payments to reflect your new income. Sometimes, your Chapter 13 payment is arbitrarily increased by the Trustee to ensure that enough money is being paid for the Trustee to pay all of your secured debts (house, car, furniture, etc).
Now let’s discuss whether your Chapter 13 payment will decrease during your bankruptcy. If your pay decreases significantly, it is sometimes possible to file a motion with the court to modify your plan payments. Your attorney will be able to discuss your options with you if you suffer a job loss or a major pay decrease. Whether a plan payment can be decreased depends on the specific facts of the case – for example, how much debt is owed, how much is owed to secured creditors, how much is owed in taxes, etc.

The bottom line is that you are usually not locked into your Chapter 13 payment – if your income significantly increases or decreases, there is a chance that your Chapter 13 payment can or will be modified to reflect the change in income. However, you will need to speak with your bankruptcy attorney about the specifics of your case.

How Are Workers' Compensation Benefits Determined?

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Workers’s compensation benefits are determined by a variety of factors.  One of the first questions is whether the injured worker is able to return to their job?  When a worker is injured on the job they are sent to a physician to determine the extent of their injury.  The physician may allow the worker to return to work and they will receive their regular salary as they perform their regular work duties.

On the other hand, the physician may determine the employee cannot work their regular job and may allow the worker to work, for example, only 20 hours per week.  If they are seriously injured, the physician may not allow them to return to the job until they reach what is known as “maximum medical improvement” or “M.M.I.”.  If the worker is unable to work their full schedule or a partial schedule, the employer’s workers’ compensation insurance company must compensate the injured worker’s benefits, such as salary, the worker would had received if they had not been injured.

Normally, the injured worker receives two-thirds of their average weekly wages lost due to the injury. The worker usually receives a weekly paycheck from their employer’s workers’ compensation insurance company to compensate the worker due to the lost time because of the injury.

Doctor Examining an X-Ray | Workers' Compensation

You may ask why only two thirds of the average weekly wages?  The general consensus is if the worker is receiving “full” benefits or 100% of their usual income, the worker would have no “incentive” to return to work.  Also the worker does not have to pay transportation cost or wear and tear on a vehicle if they are at home injured. Therefore, the North Carolina Industrial Commission has ruled that two-thirds of the worker’s salary is fair compensation.

The worker should receive these benefits until they are allowed, by the physician, to return to work or until a settlement is reached with the insurance company of the employer.

If you have been injured while at work it is important to contact a North Carolina workers’ compensation lawyer immediately.

Can I Still Get Workers' Compensation Benefits If I Return to Work?

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Returning to work after suffering an injury at work can be a risky move.  If your claim says that you are completely unable to work and then you return to work while you are still able to receive workers compensation benefits, then your employer no longer has to continue paying your workers compensation benefits.

Injury at Work | Charlotte, NC & Greensboro, NCThere is an option to have a trial return to work.  According to North Carolina Statute  §97-32.1, this is where you will return to work for a certain amount of time (up to 9 months), during this period you can still receive partial benefits from your employer.  You would have to file certain forms and paperwork to do this.  You want to make sure your employer and the Industrial Commission are fully aware that this is simply a trial period and you are not returning to work permanently at the current time.  If you make a full return to work then your compensation benefits will be terminated.  If during this trial period it is determined that you are still unfit to work then you can continue to receive full benefits that will be unimpaired by your trial return to work.  The trial period can only last for a maximum of nine months.

In summary, in most situations if you fully return to work you will no longer receive workers’ compensation payments.  However, you have a couple options other than fully returning to work. First, you can go back to work on a limited basis and receive reduced payments. A second option is returning to work for a trial period and, if you then decide you are not ready for a full return, then your full payments will resume and be unaffected.  The main point is if you and your doctor both feel you are not ready to return to work then you should consult your workers’ compensation attorney before deciding to return to work. Returning to work prematurely will cause you to lose any future benefits.

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.

Bills in MailboxIf 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.

Do I Have To Be A U.S. Citizen to File for Bankruptcy?

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Surprisingly, being a citizen of the United States is not required to file for bankruptcy. The U.S. Bankruptcy Code does not have a citizenship requirement. However, you still need to establish residency in the state where you plan to file bankruptcy.

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Will Bankruptcy Stop Creditor Phone Calls and Harassing Contact?

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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.

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