Do I Still Have to Make Mortgage Payments While I’m in Bankruptcy?
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.
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.
Can I Keep Multiple Vehicles in a Bankruptcy?
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.
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
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.
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?
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.
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.
Will Filing Bankruptcy Wipe Out Payday Loans?
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There isn’t really a straight answer to that question. Generally speaking, yes, payday loans can be wiped out by filing bankruptcy.
A payday loan will be viewed very similarly to credit card debt. Therefore, it can be wiped out through a Chapter 7 bankruptcy or mostly wiped out in a Chapter 13 bankruptcy. The key thing to look at is when the payday loan was received.
Like credit card debt, or any other debt, if you received the loan within the last 90 days there will be a presumption of abuse, or fraud, by the courts. If a debt is incurred and viewed as fraudulent then the debtor is required to pay back that debt in full. Therefore, it is important to wait at least 90 days before filing a bankruptcy after receiving a payday loan. You may need to wait even longer depending upon the amount of the payday loan.
A common tactic that payday loan companies will use is to have the person seeking the loan write a post-dated check for a certain amount. They do this so that if a person doesn’t pay the loan back they can attempt to cash the check and there will be non-sufficient funds available. The payday loan company can then try to argue that you wrote them a bad check and they could attempt to press criminal charges against you. However, it is rare they will actually attempt to do that. One of the major reasons is because a check is only considered “bad” if the person writing the check gives the impression suitable funds are in the bank to cover the check. The fact that you are post dating a check and doing so to a payday loan company makes it pretty clear you aren’t communicating that you have sufficient funds.
Once the bankruptcy is filed an automatic stay is in place that protects the payday loan companies from trying to collect on any money owed to them. However, they could attempt to press criminal charges for writing bad checks. As explained above, the chances of that are slim to none but you will want to make sure to consult with your bankruptcy attorney.
The bottom line is, payday loans may be wiped out or lessened by filing for bankruptcy but consult with a Charlotte, NC bankruptcy attorney or Greensboro, NC bankruptcy attorney to make sure you file the bankruptcy at the right time.
Can I Have Too Much Debt to File Bankruptcy?
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In terms of a Chapter 7 bankruptcy you cannot have too much debt to qualify. There is no minimum debt amount to be eligible to file for a Chapter 7. However, since a person can only file a Chapter 7 bankruptcy once every 8 years, it is important to determine that the time that you file your bankruptcy that your debt is absolutely too much for you to pay back.
For a Chapter 13 bankruptcy there are some limits in regards to having too much debt. A person can have no more than $360,475 of unsecured debt, which an example of unsecured debt would be credit cards and/or medical bills and no more than $1,081,400 in secured debt. The best examples of secured debts would be a house or car. The restrictions for a chapter 13 bankruptcy are based upon the time constraints that a person will actually be in bankruptcy. A person is required to pay back a portion of their debts within 60 months while in a Chapter 13 bankruptcy and this time frame helps determine the amounts that you will be paying each month to the trustee.
Therefore, you cannot have too much debt to file a Chapter 7 bankruptcy but you may have too much debt to file a Chapter 13 bankruptcy. If you are unable to file a Chapter 13 bankruptcy then you could always file a Chapter 7 instead.
