What Is A Quitclaim Deed?

Filling out paperworkA quitclaim deed is what some people think is called a “quick” claim deed – but the correct terminology is quitclaim deed. In North Carolina, a quitclaim deed is a document that is signed by two parties with the purpose of transferring one party’s interest in real estate to another party.

When Is A Quitclaim Deed Used?

A quitclaim deed is usually used when property is being transferred as part of a divorce proceeding or as a gift between family members, because a quitclaim deed does not give a warranty as to the title of the property. On the other hand, when a house is sold through a regular sale between two parties who are not family members, and there is a title warranty, a warranty deed is usually the type of deed that is used.

Should I Sign a Quitclaim Deed?

In North Carolina, if you are asked to sign a quitclaim deed, be sure you are aware of your rights, and talk to an attorney about your rights if necessary. Generally speaking, it is not a good idea to sign a quitclaim deed before filing bankruptcy due to the look-back period for transfers of property. However, it may make sense for you to sign one after a bankruptcy is filed, even if you are surrendering the property in your bankruptcy. You should speak with a bankruptcy attorney if you are considering signing a quitclaim deed prior to filing bankruptcy.

Can I Withdraw Or Take Out A Loan From My Retirement After Filing Bankruptcy?

Regardless of whether you have filed a Chapter 7 or Chapter 13 bankruptcy, you cannot withdraw money OR take out a loan from your retirement account without court permission.

Senior coupleIf you are in a Chapter 7 case, it is usually best to just wait until the bankruptcy case is completed and then if you need to withdraw funds or take out a loan, you can do so. If you request court permission during your bankruptcy, there will be attorney fees involved and it could lengthen your time in the bankruptcy case.

If you are in a Chapter 13 case, you need to contact your attorney as soon as you realize you may need a loan or withdrawal. The process takes some time, and usually your income and expenses have to be reviewed along with drafting the motion, filing the motion, and waiting for a court hearing. This whole process can take at least a month. Your attorney will also ask you specific questions about why you need to do the withdrawal or loan. The court will only approve withdrawals or loans if they are necessary, such as to fix your air conditioning unit, pay for a medical procedure, etc. The court will not approve the withdrawal or loan for unnecessary reasons such as taking a vacation or installing a swimming pool in your backyard.

Remember, communication with your attorney during your bankruptcy case is the key to a successful case. If you are ever in doubt, contact your attorney to find out how to proceed, but remember you cannot touch your retirement account during your bankruptcy case without getting court permission.

The Dangers of Facebook to Your Bankruptcy

Laptop KeyboardIf you’re reading this blog post the chances are good that you have a Facebook profile or account. If so, you’re not alone. Recent statistics reported by The Blog Herald indicate that there are now over 500 million Facebook users. Of those 500 million users, half of those users log in to their Facebook account every day. The average Facebook user has 130 friends and there are a staggering 30 billion pieces of content added each month. To fully understand that amount 30 billion looks like this when written out: 30,000,000,000.

So Why Does Facebook Matter to Your Bankruptcy?

Facebook is a window into your personal life. A bankruptcy Trustee, after filing bankruptcy, has the right and ability to look into that window.

When you file a bankruptcy you are required to disclose your assets and other important acts within certain time periods. If you fail to disclose the required information in your bankruptcy petition then you are committing a federal crime of perjury. You could face jail time and be fined large sums of money. Do I have your attention yet?

More and more bankruptcy Trustees are looking up debtors’ (people who file bankruptcy) social media accounts. It is so quick and easy to pull up information on social medias, it has become a logical part of the due diligence research that a Trustee’s office will complete.

Death Of A Bankruptcy Case Via Facebook

Let’s look at a common example. Husband and wife Donnie and Debra Debtors file a bankruptcy together. They fill out their bankruptcy petition and file it with the court. However, they chose not to list down some of their assets because they don’t want the courts to take it because they hope to give it to their children some day. Specifically, they don’t list down a 1957 Chevrolet Bel Air that has be restored and a whole life insurance policy with a substantial cash surrender value. Donnie and Debra show up to the creditors’ meeting and quickly realize they have some real problems.

Tom Trustee, who represents the people Donnie and Debra owe money to, has started paying a part time high school student to go online and after school and look up different debtors who have filed bankruptcy and see if they are showing assets that aren’t listed in their bankruptcy petition. Well, low and behold, the 16 year old high school student searching on Facebook has found some important information for the bankruptcy Trustee. Donnie and Debra have posted pictures on Facebook showing their newly restored 1957 Chevrolet Bel Air winning as “Best in Show” at a recent car show located in Charlotte, NC. In addition to that, Debra responded to one of her friend’s posts asking how to pay for college tuition by explaining that she and Donnie are withdrawing the cash surrender value from their whole life insurance policy to pay for their daughter’s freshman year in college.

Tom Trustee asks Donnie and Debra if they need to add anything else to their bankruptcy petition and they explain that it is accurate and complete. At that time, Tom Trustee begins to ask them about the assets not listed down in their bankruptcy petition, the car and whole life insurance policy. Stunned, Donnie and Debra first try to deny they have those assets but then the Trustee presents them with pictures printed off of their Facebook page. They eventually admit their failure to properly disclose assets.

Several weeks later Donnie and Debra are indicted and face federal charges of fraud and a fine of $150,000 by the federal government – money they don’t have because the Trustee seized both their “Best in Show” car and whole life insurance policy. Because Donnie and Debra didn’t tell their attorney about the assets they didn’t realize they could have protected both assets. The whole life insurance could have been fully protected because their children were the beneficiaries and the vehicle could have been exempted using a combination of their motor vehicle exemptions and “wild card” exemptions.

The Lessons To Be Learned

There are two important take-aways from this example. First, and most important, you should fully disclose your assets and be completely honest and forthcoming in your bankruptcy petition. The consequences of not doing so are not worth the perceived benefit. Second, tell your bankruptcy attorney about everything. Keep no secrets. If they would have discussed the concerns they had about their assets with their experienced bankruptcy attorney they would have known they could have protected their assets.

The Bottom Line: The purpose of this post is not to tell you to take hidden assets down but, instead, to encourage you to list the assets you have and discuss those assets with your bankruptcy attorney. Facebook and other social media sites are now used to confirm that you are being forthcoming within your bankruptcy petition.

What You Need to Know Before Your Chapter 13 Phone Interview

What If I Need A New Car While I Am In A Chapter 13 Bankruptcy?

Car Keys | New Vehicle in Chapter 13 BankruptcyMany times during a Chapter 13 bankruptcy the debtor will need to purchase a new vehicle.  A Chapter 13 is usually between three to five years in length.  During this time, it is common for a vehicle to begin having mechanical problems and sometimes need to be replaced with another, newer, vehicle. Should you need to purchase or replace a vehicle while you a?re in a Chapter 13 bankruptcy, it is very important  you contact your bankruptcy attorney in advance so that he or she can discuss the process with you.

In the event you need to purchase or replace a vehicle while you? are in a Chapter 13 bankruptcy, you will need to obtain approval to incur debt from the Chapter 13 Trustee and/or Court.

Request for Credit Authorization for the Bankruptcy Trustee

This is done by submitting a Request for Credit Authorization to the Trustee. The Bankruptcy Court permits the Trustee to approve credit authorization requests up to a certain loan amount (the maximum loan amount varies depending on the state and district your bankruptcy case was filed.) Your attorney will provide you with the information and necessary forms needed in order for you to obtain approval from the Trustee. In addition to completing a Request for Credit Authorization form, you will also be required to amend your budget.

Motion to Incur Debt with the Bankruptcy Court

If you are trying to obtain above a certain amount of debt to purchase a vehicle then must obtain permission from the bankruptcy court. To file a Motion to Incur Debt you need to communicate with your bankruptcy attorney and ensure they have the information they need to appropriately file the motion. Usually your attorney will need to know the amount you are looking to finance, the interest rate on the loan, the monthly payment and the time period you will be paying the loan back for.

A few important things for you to keep in mind should you need to obtain credit authorization approval from the Trustee or file a Motion to Incur Debt with the bankruptcy court is that he/she will be checking to see if you are current on your Chapter 13 plan payments and will be reviewing your amended budget to see if you can afford the new car and have the ability to make the new vehicle payments. You also will need to show having a new(er) vehicle is important to the success of your Chapter 13 plan. If the financing you are seeking to obtain for new vehicle within a Chapter 13 bankruptcy is reasonable then the Trustee or courts will almost always approve your financing request. Your bankruptcy lawyer can help walk you through the process of obtaining financing for a new vehicle.

Can I File Bankruptcy Even If I Have A Job?

Of course!  The court does not expect everyone who files bankruptcy to be down, out, and unemployed.  That’s just not how life works; our clients are good hard working people who have simply fallen on hard times. You may have a job and file a bankruptcy and in most cases unless you have signed something stating that the employer must be notified if you file a bankruptcy, your employer wouldn’t have a clue you even filed.

Male on White BackgroundIn your petition you are required to report your income in several different areas.  You will have to show your earnings for the past two years, where you work now and what your expected income going forward as well as what you have earned in the past 6 months prior to filing the bankruptcy. In bankruptcy, your income is calculated based upon a “Means Test”; although there are many other types of income besides employment that are also a factor in the means test.  This tells the court whether or not you qualify for a Chapter 7 bankruptcy or if you will need to file a Chapter 13 bankruptcy based upon your income.

In the event that you file a Chapter 13 bankruptcy your debts are a factor, but your plan payments will be based also largely upon your past 6 months of income.  For example, let’s say that based upon your arrears and debt in the plan, you’re looking at plan payments of $500 per month, BUT based upon your prior 6 months, your income shows that you have an extra $1,000 left over each month.  You would make a payment closer to the $1,000 mark because your prior income states that you can afford it.

Also, in the occurrence that you file a bankruptcy and you have any secured items in which you may wish to keep (such as a house, car, jewelry, furniture, or electronics) you must be able to show that you can afford to make the contractual monthly payments.  The court will not allow you to file a Chapter 7 bankruptcy unemployed and still keep your home unless you can show you are getting income from another source (like family support) to show you can afford the monthly payment.  Bankruptcy court has been enacted to help consumers. Whether you have a job or not does have an impact on your bankruptcy options but you can certainly still file a bankruptcy even if you do not have a job.

Why You Shouldn’t Turn Your Car in Before Filing Bankruptcy

What is Forced Placed Insurance?

If you are behind on your house payments and are considering filing Chapter 13 bankruptcy to save your home, it is important that you find out whether you have forced placed insurance.

Happy Family Standing TogetherYour bankruptcy attorney may ask you whether your homeowner’s insurance payments are usually included in your mortgage payments (in other words, whether your insurance is escrowed). If your answer to that question is yes, but you are several months behind on your mortgage payments, there are further steps you need to take.

When you fall behind on mortgage payments, the mortgage company is no longer receiving money from you each month to make your homeowner’s insurance payment on your behalf. Therefore, the homeowner’s insurance may lapse due to non-payment. The mortgage company cannot have the liability of a house with no insurance coverage, so the mortgage company will pay for insurance on your behalf. This is called forced-placed insurance because the mortgage company is essentially forcing it onto your home since there is no other insurance coverage on your home.

Why should you be concerned about forced placed insurance? The reason is that this insurance is generally much more expensive than the insurance you could find and pay for on your own. When your Chapter 13 bankruptcy is filed, the mortgage company will add the forced placed insurance costs onto the amount you are behind on payments. In the end, this could cause your Chapter 13 plan payment to be higher than necessary.

If you contact your mortgage company and find out there is forced-placed insurance on your property, speak with your Chapter 13 bankruptcy attorney about your options. He or she may recommend that you obtain your own property insurance that you will pay for out of pocket. Your attorney will also remind you to notify the mortgage company with proof of the new coverage when it has been obtained, so the forced-placed insurance can be cancelled.