North Carolina Bankruptcy

(800) 870-9465 If you are going to North Carolina Bankruptcy Court or need a North Carolina Bankruptcy Attorney then you need Cameron Law. Better in most cases then the touted "credit management", "debt reduction", "debt consolidation loans", "credit repair" and, "debt settlement"; It allows a fresh start and the ability to clean up your credit. Unlike a North Carolina Bankruptcy, none of the others help your credit, and most will damage it more.

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The second type of bankruptcy for individuals is a Chapter 13 repayment plan. In a Chapter 13, you must pay back Creditors, within five years, in full or in part to the best of your ability and you must pay as much as a Chapter 7 would have paid if there had been a liquidation. 10% plans are common. Any Chapter 13 must always pay back at least as much as a Chapter 7 would have regardless of the state in which you live. By this, we mean if your house would have been sold in a Chapter 7 and would have paid back 20,000 dollars to your creditors, your Chapter 13 must repay at least $20,000. Each local district has its own rules.

Chapter 13 plans operate very much like bill consolidation loans, in that debts are consolidated into one monthly payment which is paid to a Trustee. The Trustee then pays the Creditors. Certain debts such as attorney fees are given super priority and are paid absolutely first. Then taxes and child support are given priority and are paid before the secured debts. After priority debts, secured debts are paid. The last debts to be paid are unsecured debts. A Trustee is an attorney appointed by the Court. He is not a judge, although he runs the 341 hearing in both Chapter 7 and 13 cases and will ask questions at the 341 hearing like a judge, but these "hearings" are actually more like depositions. The trustee does not work for you. The Trustee is NOT your friend. He represents the banks and the Creditors that you owe. The Trustee's major job is to take property from you if he can. This is how he earns his fees. Although you are required to tell the truth at the hearing, this is not the time to brag about how much your property is worth if it is worthless, and it is the time to check your titles to make certain they are properly recorded. I guarantee you that he will attempt to take your home or car if the mortgage or lien is not properly recorded.

Secured claims are handled in one of two ways. The first, which we call the " catch-up & maintenance " method, is where your past due payments on secured debts are paid from your monthly bankruptcy plan payments, and payments that come due after filing bankruptcy are paid directly to the creditor ("outside the plan"). When the Chapter 13 has been terminated, you are still obligated to make any payments remaining due on the secured debts.

We call the other method the " cram-down " method. This method is used when either the collateral is worth less than the amount of the debt, or when the number of payments left on a debt is less than the length of the plan. The following examples illustrate the "cram-down" method. In it you can pay what the collateral is worth (not what you owe on it), stretch out the payments to 36 months, and pay a reduced interest rate. If you have a second mortgage with no equity, you can completely eliminate it. To qualify for a "cram-down" you have to have paid the purchase money for a car 910 days bfore filing bankruptcy, and for other property you must have made the first payment at least a year before filing bankruptcy.

The ability to "refinance" your secured loans through this second method permitted by Chapter 13 bankruptcy lets you reduce the monthly payments and is sometimes the only way to have enough cash flow to keep your property.

 

HOW A CHAPTER 13 WORKS

A Chapter 13 is a reorganization of your debt. It will stop foreclosures and the repo man in their tracks. In a Chapter 13 Bankruptcy, you will pay the Trustee all your "available" money for 5 years (generally) and he will pay your debts that are included in the Ch 13. At the end of the Ch 13, all unsecured debt that is left over is discharged. Some things can affect your discharge, such as being behind on a domestic support payment, if you have received a discharge in a case filed under chapter 7 (or 11 or 12) during the 4-year period preceding the filing date of the chapter 13, or in a prior chapter 13 filed within two years prior to filing the new case.

How Much Will I Pay?

In a North Carolina Chapter 13 Bankruptcy you will pay a minimum of 10-25% of your unsecured debt, depending on the county in which you reside. You may pay more than this if you have more "available" money every month. In a Chapter 13 you can also catch up on mortgages and vehicle loans - if you are behind on them.

This is how to get a rough estimate of your payments in a Chapter 13 Bankruptcy in North Carolina . Figure out all your expenses, from mortgages to cable TV. Some things generally cannot be figured in, such as babysitting and private schools. Subtract that from what you make and you will get how much you will pay per month - if you qualify.

To qualify, you must have enough money left over to pay at least 10-25% of your unsecured debt, AND be able to catch up on your mortgage in 3-5 years. On top of this you will have to pay at least part of your attorney's bill in the Chapter 13, as well as 3-10% to the Trustee for overseeing your bankruptcy.

What Makes a Chapter 13 Better than a Chapter 7?

A Chapter 13 can stop foreclosures and repossessions. A Chapter 13 bankruptcy can reorganize debt like taxes and mortgages, and can discharge things that a Chapter 7 cannot discharge.

 

What Makes a Chapter 13 Worse than a Chapter 7?

A Chapter 13 is much more expensive to file AND you make large monthly payments for 3-5 years!

During the Chapter 13 Bankruptcy, in North Carolina , you will need to ask the Trustee for every major financial change, from buying a car to selling one. Each time your attorney must do this for you, and you will be charged for asking.

Also, and perhaps most important, MOST CHAPTER 13s ARE NOT COMPLETED! Due to greed, many lawyers, especially in the South, push clients to file a Chapter 13 Bankruptcy instead of a Chapter 7 Bankruptcy. Many times a client will inquire about a Chapter 13 and the attorney will not mention a Chapter 7. We find this unethical. If there is any possibility of doing a Chapter 7, we WILL inform you. Many times people are still over their head in a Chapter 13 and they need to face the music. In the South, up to 70% of the bankruptcies are Chapter 13s. With Cameron Law we have about a 15% of our clients filing Chapter 13. Attorneys make much more doing a Chapter 13 as opposed to a Chapter 7. You do the math.

 

*THIS IS A SAMPLE CHAPTER 13 BANKRUPTCY - YOUR SITUATION WILL VARY*  

Jon and Tammy Jones have 3 children, and bring home an income of $2,165 monthly. Their monthly bills, before filing a Chapter 13, were $1955 as shown below:

Accounts	Monthly Payments	Balance
Home Loan (4 months behind)	$510/month	$65,000
'97 Ford Van Loan	$345/month	$12,000
'96 Chevy Car Loan	$220/month	$9,000
Bank Loan	$190/month	$6,800
Visa	$60/month	$4,900
Mastercard	$300/month	$8,700
Finance Company	$120/month	$4,500
Medical Bills	$60/month	$1,700
Department Store	$150/month	$3,600
Total Payments	$1955/month

If Jon and Tammy file a Chapter 13 Bankruptcy Reorganization to stop the sale of their home, and if Jon and Tammy have average living expenses of $1,345 per month, this may happen:

1 .  The monthly Chapter 13 payment for Jon and Tammy would be $310 per month for 57 months, beginning January 5, 2002. The payment of $310 would catch up the house payments, pay off both vehicles, and take care of the bank loan, the two credit cards, the finance company, the medical bills, and the department store debt.

2.  In addition to the $310 payment, Jon and Tammy must start back making the $510 house payments in January, 2003, for a total of $820 in monthly payments.

3.  After Jon and Tammy make their $310 Chapter 13 payment, and the $510 house payment, they will have $1,345 per month for living expenses (food, electricity, insurance, car expenses, recreation, medical, household supplies, clothing, telephone, cable, etc.).

4.  Under Jon and Tammy's circumstances, the unsecured creditors were paid 1% of their balances ***, and the other 99% of their balances were discharged; further, Jon and Tammy were able to get titles to their vehicles by only paying the actual value of the vehicles.

*** Please Note: In NC, the minimum repayment to unsecured creditors is 10-25%.