Source: http://www.raleighbankruptcy.com/blog/
Timestamp: 2019-04-26 05:58:40+00:00

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The purpose of this post is to provide answers to many of the most common credit reporting questions relating to bankruptcy, including (1) how bankruptcy is reported; (2) how bankruptcy or defaulted accounts affect authorized users and co-signers; (3) how accounts, including foreclosures and repossessions are reported after bankruptcy; and (4) the rules on how long bankruptcy and other credit events remain on your credit report.
A credit report is divided into 4 sections: (1) Personal Information; (2) Account History; (3) Public Records; and (4) Inquiries. This post will only discuss the public record and account history sections which are impacted by bankruptcy and related matters.
Chapter 7 Bankruptcy (discharged granted) – 10 years from filing.
Chapter 7 Bankruptcy (dismissed, no discharge) – 10 years from dismissal.
Chapter 13 Bankruptcy (discharged granted) – 7 years from filing.
Chapter 13 Bankruptcy (case dismissed, no discharge) – 7 years from dismissal.
Special Note: Federal Law allows all types of bankruptcy to appear for 10 years (15 U.S.C. Sec. 1681c(a)(1)), but most credit reporting agencies report chapter 13 for only 7 years since a portion of the debts are paid.
Account History Section. Provides pertinent information about each credit account, including: (1) the creditor’s name; (2) account number; (3) creditor’s phone number; (4) the responsible party and your relationship to the account; (5) date the account was opened; (6) last activity; (7) high credit; and (8) the payment history on the account.
Chapter 7 After Discharge – the creditor’s account will show the payment history (up to the filing date), the balance owed at $0.00 and a notation that the debt was “discharged through chapter 7 bankruptcy.” The account and history will remain for 7 years from filing of bankruptcy or first delinquency (if account was not ever again brought current), whichever period is earlier.
Reaffirmed Debt – If a debt has been reaffirmed, and not timely revoked, it can report as if no bankruptcy had been filed. Please note, however, that a creditor cannot be forced to continue to report the debt. But you can have any inaccuracies corrected and request that the debt be reported.
Student Loans – Student loan debt is generally not discharged in the typical bankruptcy case, therefore, it will continue to report as if no bankruptcy had been filed.
Child Support and Alimony – Child support and alimony are not dischargeable in chapter 7 and will continue to report as if no bankruptcy had been filed.
Mortgage Debt After Chapter 7Discharge – In North Carolina it is uncommon (and generally not advisable) to reaffirm a mortgage loan that was current on the chapter 7 filing date. Typically a chapter 7 debtor simply continues to make voluntary payments on the discharged debt to prevent the creditor from foreclosing its collateral. Therefore, this type of debt typically shows just like any other debt included and discharged in the bankruptcy. It will not show any future payment history after the bankruptcy is filed and will reflect the balanced owed to the mortgage creditor as $0.00. The account and history will remain for 7 years from filing of bankruptcy or first delinquency (if account was not ever again brought current), whichever period is earlier.
Foreclosure Filed after Chapter 7 Bankruptcy – If the foreclosure is filed after the filing of the bankruptcy the account should not show as “foreclosed,” since the last event concerning the account will be the bankruptcy so it will show payment history up to the filing date and will show the balance owed as $0.00. It will also have a notation that it was “discharged in bankruptcy.” The account and history will remain for 7 years from filing of bankruptcy or first delinquency (if account was not ever again brought current), whichever period is earlier.
Repossession After Chapter 7 Bankruptcy – If the repossession occurs after the filing of the bankruptcy the account should not show as “repossession,” since the last event concerning the account will be the bankruptcy so it will show payment history through the filing date bill will reflect the balance owed as $0.00 and will contain the notation that it was “discharged in bankruptcy.” If, however, the debt was reaffirmed (and the reaffirmation was not timely revoked), the debt will show repossession and the balanced owed to the creditor after the vehicle was sold.
Chapter 13 During Pendency of Case – Once the chapter 13 plan is confirmed the account history should reflect the reduced balance the court has determined. For example, if a car loan is “crammed down” to the value of the vehicle, the amount owned should be reduced to this lower amount. In addition, there should be a note that the account is “included in chapter 13 bankruptcy.” In addition, the creditor is not permitted to keep reporting the account as past due. Creditors should follow the above rules, although not all do. Therefore, it may be necessary to dispute or seek sanctions for the inaccurate reporting.
Chapter 13 After Discharge – The creditor’s account will show the payment history (up to the filing date), the balance owed at $0.00 and a notation that the debt was “discharged in bankruptcy.” The account and history will remain for 7 years from filing of bankruptcy or first delinquency (if account was not ever again brought current), whichever period is earlier.
Chapter 13 – Omitted Debts – All debts are required to be listed in a bankruptcy. However, should a creditor inadvertently be omitted (and the schedules not timely amended), the omitted account will not be discharged and will be continue to be reported as if a bankruptcy had not been filed.
Future Spouse – Getting married does not result in merged credit histories. However, if the potential spouse will also be on a future loan (such as may be the case in connection with buying a home) the credit history of the spouse will be reviewed in connection with the lender’s decision to make the loan, unless you can qualify on your own.
Co-Signer’s Credit Report Where Co-Signer Continues Paying Debt – If the non-filing co-signer continues to pay the debt, and the account was not late, bankruptcy should have no affect on the non-filing co-signer’s credit report. It will not appear on the in connection with the co-signed account nor on the public record section.
Co-Signer’s Credit Report Where Co-Signer Does Not Pay Debt – If the co-signer’s account is not paid by the co-signer after the bankruptcy filing a notation will be included to the effect that the debt was “charged off,” or “account closed.” It will also show the negative payment history on the account until it was closed or charged off, but it generally will not reference bankruptcy on the co-signer’s credit report. Each creditor will determine exactly how the account will be listed. If you are concerned you could have the co-signer check with the creditor and ask how the account will be reported.
Co-Signed Account Where There Are Late Payments But Co-Signer Continues To Pay – This is subject to the normal reporting rules (late payments will remain for 7 years), but it generally will not reference bankruptcy on the co-signer’s credit report.
Authorized Users – Authorized Users, unlike co-signers, have no personal liability on account. If an Authorized User’s credit report reflects negative payment information from the account holder, including bankruptcy, the authorized user can request that the credit reporting agency remove the negative information. Adding and Authorized User to Your Account will not “import” his or her negative information onto your credit report.
One final note: If you apply for credit or insurance of more than $150,000.00, or for a job with an annual income of $75,000.00 or more, credit reporting agencies may report bankruptcies, lawsuits, paid off tax liens, accounts sent for collection, criminal records, past due child support, or any other adverse information beyond the normal time limits. 15 USC Sec. 1681c(b)(1) – (3). In practice, however, credit reporting agencies often delete all items after 7 to 10 years.
If you have any questions not answered in this post please fee free to contact us at (919) 875-8773.
You need to file bankruptcy and you have been told you must list all creditors, including their address, balance owed and account number. The task of locating this information may seem overwhelming especially if you have not been making your payments for a long period of time. The purpose of this post is to discuss what resources you may consult to assist you in locating the correct information for each of your creditors.
Important Note: Regardless of how you obtain the address that you use in your bankruptcy schedules, copies of the source of the address that you use should be maintained by you in the event proper service ever becomes an issue. You should keep those sources with your bankruptcy paperwork and you need to keep these documents with your important papers. If you get the creditor’s address online, you should print out the appropriate web page that shows the address used.
If you have a recent account statement from a creditor, it could not be easier, just bring it to your attorney and he can locate the correct address to use on your bankruptcy schedules. We recommend organizing your bills in groups (e.g., mortgages, car loans, medical, credit cards), and keeping the collection agency letters together with the statements from the original creditor. It is important to keep in mind that section 342(c)(2)(A) of the Bankruptcy Code requires that you use the correspondence address from these statements if the statements were received by you within the 90 days prior to filing your case.
The resources that follow are to be used if you have not received statements or correspondences within that 90-day period, and are offered as suggestions only.
You can call the creditor to obtain the correct address to use. This may be necessary if you recently had a medical procedure and have not yet received all the bills that related to the medical procedure. Please keep notes concerning whom you spoke to and when you spoke to them. Of course make sure to take down the address carefully to avoid errors. If you received a phone call from the creditor or collection agency, you could search your phone for the phone number, call and request the correct address.
Please exercise caution when speaking to a secured creditor that can repossess collateral, such as a lender that financed the purchase of your car. If you mention bankruptcy, they may repossess your vehicle.
Some times you may receive an email from the creditor or collection agency, especially if you have made a payment recently. The email may have an address or a phone number that you can use to obtain the correct address.
In recent years it has become more common for individuals to pay bills electronically. In such cases you may not even receive statements. If this is the case, you may obtain the correspondence address from the creditor’s website. As noted above, please print the page and retain a copy for your records.
You can search online, using a search engine such as Google, for the creditor’s official website. Typically you can find the creditor’s correspondence address on its official website.
FDIC Bank Find (Use with caution if you are not an attorney since the name searched for on the websites would have to be correct, or the wrong address could be obtained).
As noted above, if your debts have been sent to collection we recommend that you list on your bankruptcy schedules the address for the original creditor and all collection agencies that may have tried to collect that account.
We advise our clients that, if after they file bankruptcy they receive phone calls from creditor to take notes concerning when and who they speak to, and to tell the creditor or collector that they filed bankruptcy, give the case number, the court, the date they filed bankruptcy, and their attorney’s name and phone number. We also ask our clients to request from the creditor or collector for a correct address so that they contact our office to add the creditor in the event that they failed to list them.
Short Answer: All creditors must be listed (no exceptions).
People or businesses file bankruptcy, you don’t file against this debt and not against that debt. Therefore, ALL creditors must be listed in your bankruptcy filing; whether they are dischargeable or not; whether the amounts owed are fixed or not; whether you agree that you owe the creditor money or not; and whether or not the debt is owed to friends or relatives. In short even if it is remotely possible that you owe someone money you should error on the side of caution and list the “potential” creditor.
A person that may have the right to sue you for something.
If you are a contractor it could include a person that may have a warranty claim against you.
Student Loans, and other generally nondischargeable debts (criminal restitution charges, fines, etc).
A debt owed to a friend.
A debt owed to a relative.
A potential debt owed to a person from a former relationship, who may claim you owe them money.
A current or past tenant.
A customer who potentially could have the right to assert a claim against you.
An entity you may have written a bad check to.
A bank on an overdrawn account.
A party to a contract you may have breached.
Professionals such as lawyers and accountant to whom you may owe money.
Governmental Creditors holding potential claims for overpayment of public assistance, Social Security or unemployment claims.
Please also note that your schedules are signed under penalty of perjury. Therefore if you knowingly fail to list a creditor you will be in violation of the bankruptcy law. Moreover, failure to list a creditor can prevent the debt from being discharged in a chapter 13 case or in a chapter 7 case where the trustee administers assets. In addition, failing to list a creditor will make correcting a credit report more difficult.
If you believe you failed to list a creditor in a bankruptcy case you already filed, you should contact your attorney immediately to see if there is sufficient time to add the creditor by amending your schedules.
If you have questions please feel free to contact us or call 919-875-8773.
If I file bankruptcy in North Carolina what property may I keep or claim as exempt?
Upon the filing of the bankruptcy petition all property that the debtor has an interest in becomes part of the bankruptcy estate. In order to retain the property it must be claimed exempt. Exemptions are often designated in dollar amounts, rather than a specific item of property. In such cases, if the equity is within the applicable exemption dollar amount the property will normally be exempt.
If you have lived in North Carolina for the 2 years prior to the filing of the bankruptcy case, the applicable exemptions will be the North Carolina Exemptions, plus applicable non-bankruptcy Federal exemptions (which are discussed below). In addition, certain assets never become part of the bankruptcy estate, and therefore cannot be reached by the bankruptcy trustee. The Bankruptcy Reform Bill, passed in 2005 also added some additional limitations on exemptions that do not apply in the vast majority of cases.
Claiming the proper exemptions and the application of each exemption can be complex, please feel free to contact us at (919) 889-1283 to get more information or you can contact us through the contact link by clicking here.
Residence or Burial Plot. $35,000 equity in real or personal property used by the debtor or a dependent of the debtor as a residence (i.e. a house or mobile home) or burial plot, for the debtor or a dependent of the debtor. ($60,000 in a residence for an unmarried widow or widower who is over 65 years of age, so long as the property was owned by the debtor with the deceased spouse as a tenant by the entireties or as a joint tenant with right of survivorship).
Wild Card. $5,000 in any property, less any amount above $30,000 used to claim a residence or burial plot (or less any amount above $55,000 for an unmarried widow or widower over 65, claiming the higher exemption noted above) in N.C. Gen. Stats. Sec. 1C-1601(a)(1).
Motor Vehicle. $3,500 in one motor vehicle.
Household and Personal Items. $5,000 in household furnishings, household goods, wearing apparel, appliances, books, animals, crops or musical instruments held primarily for the personal, family, or household use of the debtor or a dependent of the debtor. This is increased by $1,000 for each dependent of the debtor, not to exceed an additional $4,000.
Tools of Trade. $2,000 in any implements, professional books, or tools of the trade of the debtor or a dependent of the debtor.
Cash Value in Life Insurance. The debtor may exempt the cash value in whole life insurance provided the beneficiary on such policy is the spouse and/or children of the debtor, as provided in Article X Section 5 of North Carolina Constitution.
Professionally Prescribed Heath Aids. The debtor may exempt professional prescribed health aids of the debtor or a dependent of the debtor.
Compensation for Personal Injury. Compensation for personal injury, including compensation from a private disability policy, annuity or compensation for the death of a person upon whom the debtor was dependent for support (is not exempt from the claims for funeral, legal, medical, dental, hospital and health care charges relating to the accident or injury giving rise to the compensation).
Individual Retirement Plans. The debtor may exempt an individual retirement plans (as defined in the Internal Revenue Code (title 26 of the United States Code), and any plan treated in the same manner under the Internal Revenue Code), including IRAs (26 USC Sec. 409(a)), Roth IRAs (26 USC Sec. 408A), or individual retirement annuities (26 USC Sec. 408(b)). Note: unlike IRA’s, 401k’s do not become part of the Bankruptcy Estate at all. See Paterson v. Shumate, 504 U.S. 753, 112 S.Ct. 2242 (1992)(See discussion below).
529 Plans. The Debtor may exempt a 529 college savings plan, not to exceed a commutative limit of $25,000, but excluding any amount placed in such plan within the 12 months preceding the filing of the case, unless such contributions were made consistent with the Debtor’s past pattern of contributions. The funds are exempt only to the extent the funds are for a child of the Debtor and will actually be used for such child’s college expenses.
Retirement Plans of Other States. The Debtor may exempt the retirement benefits under the retirement plans of other states and governmental units of other states.
Alimony, Support, Separate Maintenance and Child Support Payments. The Debtor may exempt alimony, support, separate maintenance and child support payments, whether received or to which the Debtor is entitled, but is limited to the extent such payments or funds are reasonably necessary for the support of the Debtor or a dependent of the Debtor.
NOTES CONCERNING EXEMPTIONS UNDER N.C. GEN. STATS. 1C-1601. The exemptions listed above are the extent of the exemptions allowed under NC Gen. Stats. 1C-1601. There are, however, other exemptions provided for under North Carolina law.
There are also certain limitations placed on the above exemptions for recent purchases of items that may be exempted under the wild card, motor vehicle, household good or tool of trade exemptions. In this regard, if items purchased within 90 days of the filing date cannot be directly traced to exempt property (with no additional property used to purchase the property) those items cannot be claimed exempt under the wild card, motor vehicle, household good or tool of trade exemptions.
The exemptions are inapplicable to (i) the United States, or its agencies as may be provided by Federal Law, (ii) the State or its subdivision for taxes, appearance bonds or fiduciary bonds; (iii) a lien of a laborer or mechanic for work done for the person claiming the exemption by only as the specific property affected; (iv) for payment of obligations contracted for the purchase of the specific real property affected.
There are also certain alternative exemptions to these set forth in N.C. Gen. Stats. §1C-1601, outlined above. Those are provided under N.C. Gen. Stats. §1C-1602, which allow the Debtor to elect the personal property and homestead exemption provided in Article X of the North Carolina Constitution, namely, $1,000 in real property owned and occupied by the Debtor and $500 in value of personal property. Because of the lower amounts provided for in the North Carolina Constitution, it is rarely advisable to elect these lower exemption amounts.
Wages. The Debtor may exempt certain wages and earnings from self employment to the extent that such are earnings from personal services are earned within 60 days prior to the petition and are necessary for the support of the Debtor or his family. N.C. Gen. Stats. §1-362.
Public Assistant Payments. Payments made for public aid and assistance (N.C. Gen. Stats 108A-36).
Unemployment Compensation. (N.C. Gen. Stats. Sec. 96-17).
Motor Vehicle Financial Responsibility Deposits. (N.C. Gen. Stats. Sec. 20-279.25).
Payments to Fraternal Benefit Societies. (N.C. Gen. Stats. Sec. 58-25-85).
Workers Compensation Benefits. (N.C. Gen. Stats. Sec. 97-21).
Teacher and State Employee Pensions, Retirement Benefits and Deferred Compensation. (N.C. Gen. Stats. Secs. 135-9 and 147-9.4).
Local Government Employee Retirement Benefits. (N.C. Gen. Stats. Sec. 128-31).
Retirement Benefits Paid To Fireman, Rescue Squad Workers and Law Enforcement Officers. (N.C. Gen. Stats. Secs. 58-86-80 and 143-166.30).
Retirement benefits paid to Legislators. (N.C. Gen. Stats. Sec. 120-4.29).
Benefits Paid Under the Supplemental Retirement Income Act of 1984. (N.C. Gen. Stats. Sec. 135-95).
Disability Benefits. (N.C. Gen. Stats. Sec. 135-111).
Policies or Proceeds of Group Life Insurance. (N.C. Gen. Stats. Sec. 58-58-165).
Crime Victim Compensation. (N.C. Gen. Stats. Sec. 15B-17).
A Partner’s Interest in Specific Partnership Property. (N.C. Gen. Stats. Sec. 59-55).
Payments Awarded to the Blind for Aid and Assistance. (N.C. Gen. Stats. Sec. 111-18).
North Carolina Case Law Exemptions.
Real Property Held As Tenancy By The Entireties. Tenancy by the Entireties Property is Exempt Except As To Joint Creditors and Taxing Authorities. Although, use of this exemption is complex, property is tenancy by the entireties property if it is: (i) real estate; (ii) located in the state of North Carolina; (iii) owned jointly by a husband and a wife (if real property is acquired while married it will be tenancy by the entireties property, unless the deed clearly states otherwise. However, if property is jointly owned and the joint owners subsequently marry the property does not automatically become tenancy by the entireties property – a new deed must be re-recorded). See Generally, Grabenhofer v. Garrett, 260 118, 131 S.E.2nd 765 (1963).
Tenancy by the Entireties property is 100% exempt from the claims of the separate claims of each spouse, except for federal taxes. However, it is not exempt from the claims of joint creditors (claims that are owned jointly by a husband and a wife). It is, therefore, important that there are no joint debts in a case before this exemption is relied upon in bankruptcy. It is also important to note that North Carolina law is also clear that most medical bills are going to be joint debts, other than for cosmetic type procedures.
If available this can be one of the most important exemptions available under North Carolina Law. As an illustration, I have had a prior client keep 19 million dollars of tenancy by the entireties property (including office buildings, and apartment complexes) against the substantial claims of the EPA.
The Tenancy by the Entireties ownership can be destroyed by (i) death (the surviving spouse becomes the sole owner as a matter of law); (ii) divorce; and (iii) voluntary partition by both spouse.
Foreign Service Retirement and Disability Payments. (22 USC Sec. 4060).
Civil Service Retirement Benefits. (5 USC Sec. 8346).
Railroad Retirement Act Annuities and Pensions. (45 USC Sec. 231m).
Veterans benefits. (38 USC Sec. 5301).
Special Pension Paid to Winners of Congressional Medal of Honor. (38 USC Sec. 1562).
Annuities Payable for Service in the General Accounting Office. (31 USC Sec.776).
Social Security Benefits. (42 USC Sec. 407).
Injury or Death Compensation Payments from War Risk Hazards. (42 USC Sec. 1717).
Wages Owing a Master or Seamen, Exempt for Support of a Spouse And/or Minor Children. (46 U.S.C. Sec. 11109).
Longshoremen and Harbor Workers Compensation Act Death and Disability Benefits. (33 USC Sec. 916).
Finally, other property may be effectively “exempt” by operation of the definition of “property of the estate” in 11 USC Sec. 541.
401k Plans and 403b Plans. As stated above, the United States Supreme Court has held that ERISA qualified plans such as 401k and 404b plans and other ERISA qualified retirement plans do not become part of the bankruptcy estate and the result is to make such plans unreachable by creditors and thus the Bankruptcy Trustee. See, Paterson v. Shumate, 504 U.S. 753, 112 S.Ct. 2242 (1992).
Please feel free to contact us at (919) 889-1283 to get more information or you can contact us through the contact link by clicking here.
Bill Berggren is a kind soul who knows his business inside and out. More importantly he is compassionate, ... C.M.

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