How Long Do I Have to Leave My House After Filing Bankruptcy?

There is no definitive answer as to how long you can stay in a house that you are surrendering or giving up in the bankruptcy.  We tell our clients they will have, at minimum, 30 days they can stay in the home after filing bankruptcy.  However, normally someone who has surrendered their property in bankruptcy can stay in their house for two months without many problems.  The length a Debtor can stay in the home depends upon how fast the mortgage company takes legal action to gain possession of the home after filing the bankruptcy.

Foreclosure Sign in Front of House

Shortly after the bankruptcy is filed, the mortgage company’s attorney usually will ask the bankruptcy judge permission to begin the foreclosure proceeding to gain legal title and possession of the home. This is known as asking for a “relief from the automatic stay” from the court.  If the client is giving up or surrendering the home, the judge will usually allow the mortgage company to regain title to the home.  At this time, it is up to the mortgage company to take action to take possession of the home.  This is usually done about 60 days after the bankruptcy is filed.  However, we have had clients stay in the home for over 12 months after filing the bankruptcy before the mortgage company took possession of the home – although that time period is not typical.

In conclusion, you will typically have about 60 days and all the way up to 1 year after filing the bankruptcy before you have to leave the home. Again, this depends upon how fast the mortgage company wants you out. We encourage our clients to start looking for a new place to stay when they make the decision to surrender the property.


How Do I Get Financing for a Vehicle After Bankruptcy?

Often, when a person files bankruptcy, they are in one of four situations regarding a vehicle:

They are behind on their payments and must surrender the car (this usually happens in a Chapter 7 bankruptcy).

They drive an older vehicle that is paid off.

They are borrowing a friend or family member’s vehicle.

They are current on their payments and are able to keep their car in a Chapter 7 bankruptcy or they are able to catch up on the payments in a Chapter 13 bankruptcy.

If you fall into the first three categories, odds are, not too long after your bankruptcy is complete, you will need to purchase a new vehicle. Unfortunately, most people do not have enough extra money to pay cash for a reliable vehicle. Instead, they must look at financing an automobile.

Male'­s hand writing in the document

If you need to finance a vehicle, you should wait until your bankruptcy has been discharged. If you can, you should then wait a few months and be sure that you pay all of your bills on time – even your utility bills. This will help you to begin rebuilding your credit.

When you are ready to look into financing, be sure to “shop around” at various dealerships to get competitive interest rates and prices. With the ability to do research online many of our clients have had a lot of success by shopping around online. You have the ability to contact a countless number of financing companies to see what opportunities they can provide for you.


Do not look at brand new vehicles – instead, you should be looking at two or three year old vehicles that are new to you. This will help to dramatically reduce your purchase price.

Do not be surprised if you receive an interest rate between 13-20% after your bankruptcy, simply as a result of your bankruptcy filing. One way to compensate for a higher interest rate is to look at vehicles with a lower purchase price – you must ensure that you can afford the monthly payment in your budget. For more on monthly budgeting, look at our budgeting after bankruptcy series.

The biggest thing to keep in mind when obtaining financing for a vehicle after bankruptcy is that you want a reasonable and dependable vehicle – one that you can truly afford, not necessarily the nicest, newest vehicle on the lot. That can come in time after you are able to get a lower interest rate.

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

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?

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?

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.

Bankruptcy Versus Debt Consolidation: The Pros and Cons

Bankruptcy QuestionsDo your debts have the best of you?  Once you make the decision do something about it, you usually contemplate debt consolidation or bankruptcy.  They are both valid options for you to consider. Below we have explored some of the benefits and drawbacks of each.

Debt consolidation can take many forms, but for this blog we will look specifically at companies that take some or all of your debts and negotiate a settlement with your creditors.  This agreement allows you to make a single monthly payment to the debt consolidation company who then distributes payments to your creditors.  The negotiated settlement percentage is often agreed to in advance between the debt consolidation company and your creditors.  The debt consolidation company then makes your monthly payment to the creditors.  This sounds great, so are you ready to move forward with debt consolidation?  We suggest you closely look at the pros and cons.


You make one single payment each month for your debts to the debt consolidation company.

You may lower your overall monthly payment.

You can avoid bankruptcy.


The debt consolidation company is unable to negotiate with all of your creditors leaving you to negotiate with some creditors on your own.

Creditors report negatively on your credit since you are not paying the full amount owed each month (this is frustrating since they agreed to the reduced amount).

The debt consolidation company may not pay your creditors timely, and sometimes not at all, each month resulting in derogatory impact on your credit.  This can stay on your credit report for seven years.

A surprise lawsuit is served on you by the Sheriff’s office when you discover one or more creditors have not been paid as part of the debt consolidation.

Creditor sends a 1099C to you for the forgiven debt, a/k/a taxable income, resulting in taxes owed to the Internal Revenue Service.

Your monthly payment is only slightly lower than before entering debt consolidation.

Duncan Law, PLLC believes that debt consolidation is a viable and appropriate approach for some individuals.  However, be careful who you choose since there are scams and questionable companies marketing as debt consolidation or credit counseling organizations.  We recommend you contact the Better Business Bureau or your local United Way to see who they recommend.

Bankruptcy is the legal approach to consolidating or eliminating your debts.  Depending on your income and your personal situation, you may want or need to file a Chapter 13 bankruptcy which consolidates your debts.  Similar to debt consolidation, you pay a percentage of your unsecured debts (credit cards, medical bills, personal loans, foreclosures, repossessions, etc.) back over a period of time.  The percentage paid back to unsecured creditors varies by client but is usually between 10% – 20%.  In some situations, Chapter 7 bankruptcy is the correct approach and it will completely eliminate debts on credit cards, medical bills, personal loans, foreclosures, repossessions, etc.  So you think bankruptcy is the best approach?  Again, we suggest you look at the pros and cons.


In a Chapter 13 bankruptcy, you make a single payment each month to a Trustee that makes the payments on your behalf.  The Trustee is appointed by the federal government and payment made by the Trustee are scrutinized and audited.  This payment plan is a minimum of three years and a maximum of five years depending on your specific situation.

A Chapter 7 bankruptcy will eliminate unsecured debts while allowing you to retain your home and car in most cases.

Once the bankruptcy is filed, a “stay” in enacted which keeps your creditors from suing you, repossessing or foreclosing on your property, or taking further legal action against you.

You are not taxed by the Internal Revenue Service on the debt forgiven in bankruptcy.

You are able to obtain a fresh start once the bankruptcy is complete, and obtaining credit after bankruptcy is much easier than you would expect.


Not everyone will qualify for a Chapter 7 or Chapter 13 bankruptcy.

Bankruptcy will be on your credit report for seven years from the date of filing in a Chapter 13 bankruptcy and ten years from the date of filing in a Chapter 7 bankruptcy.

In a Chapter 13 bankruptcy, you must obtain approval from the bankruptcy court for the purchase of cars, homes or other items that cause you to incur additional debt.

Bankruptcy is viable option when a fresh start is needed.  Depending on the individual’s circumstances, bankruptcy can provide a repayment plan, a Chapter 13, or a debt elimination plan, a Chapter 7.  If you are considering bankruptcy, please contact Duncan Law, PLLC to discuss your options.

Can I Amend My Bankruptcy After Filing?

In short, yes, you can amend your bankruptcy after filing; it just depends on what you are amending and the timeframe.  Here are some common amendments and the timeframe:

Adding a Creditor: Anytime up until the discharge.  You will need to speak with your attorney to establish the fees for this.  The court will also charge a filing fee for adding the creditor.

Changing an Address: Anytime up until the discharge.

Bills in Mailbox

Changing a Budget: No longer receiving income?  Have an added expense that you forgot?  These changes can be made at any point up until the discharge.

Adding Property: Anytime up until the discharge.  BEWARE: Any property that is added to the bankruptcy must be protected using your exemptions.  You can only change the bankruptcy exemptions up until the hearing unless you a) have been instructed by the bankruptcy Trustee to change the exemption, or b) file a motion with the court asking for them to allow the exemption change.  Anytime there are additional motions to file that are above and beyond the norm, there are likely additional charges in which you will need to discuss with your attorney.

Surrendering Property: Yes, you can change your mind!  Maybe that car payment is hindering your ability to regain your footing as easily as you thought.  You can give that car up at any point up until your discharge.

These are just a few common scenarios in which you may choose to amend your bankruptcy.  Of course, each bankruptcy is different and each person’s case and needs are different. You will want to consult your bankruptcy attorney for their advice.

What Steps Do I Take to Obtain a Loan Modification?

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.