Exempt Property In Raleigh North Carolina
You might think that you will lose all your properties and assets after declaring bankruptcy. However, there are several bankruptcy exemptions in North Carolina. Bankruptcy law allows debtors to keep a certain amount of property after going through bankruptcy proceedings. This is calledexempt property. Some exemptions are:
- Motor vehicles
- A part of your unpaid but earned income
- Public benefits
- Compensation awarded for personal injury claims
What Is Chapter 7 Bankruptcy
Bankruptcy under Chapter 7 settles debt by liquidating the applicant’s assets and properties. After the sale, the court keeps a percentage of the proceeds for the assigned trustee and pays creditors with the rest. Chapter 7 bankruptcy is unavailable where the applicant has made a previous filing in the last eight years.
Also known as liquidation bankruptcy, Chapter 7 bankruptcy may be completed in a few months. Since there is no repayment plan, the court may approve the application, sell all non-exempt assets, and resolve the case within six months. However, like other types of bankruptcy, debtors must continue to pay alimony, child support, student loans, and criminal fines. A Chapter 7 bankruptcy filing stays on the applicant’s report for ten years after the filing date.
In most cases, Chapter 7 bankruptcy applicants can discharge the following debts:
- Mortgage loans
- Student loans – proof of undue hardship is required
Approval for Chapter 7 bankruptcy requires a means test to determine that the application is not an abuse of the bankruptcy system. The court must appraise the applicant’s financials, including income, expenditure, secured debt, and unsecured debt.
Regardless of the preferred type, bankruptcy law prevents debtors from applying within 180 days of a previous discharge if any of the following applies:
Do I Need To Liquidate All My Assets In Chapter 7 Bankruptcy
Good question. Chapter 7 bankruptcy is designed to decrease debt by liquidating assets to pay off creditors. In reality though, you have some options and exemptions which ensure that you arent left with nothing.
Chapter 7 bankruptcy works by selling in a process known as liquation valuables to pay off accumulated debts. Many types of property and possessions can be liquidated in a bankruptcy case, but there are some exceptions to the rules. Find out what you can keep and what you may have to let go.
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Does Oklahoma Allow Federal Exemptions
Oklahoma does not recognize the federal exemptions.
Every state has its own set of property exemptions. And some states also allow you choose between their exemptions and a set of federal bankruptcy exemptions. When they do, they will generally let you to choose the system that is the best fit for you. Although some states allow you to use the federal bankruptcy exemptions, others do not.
How Do Exemptions Work
When you file for Chapter 7 bankruptcy, one of the biggest questions is whether or not you will be able to keep your property.
That depends on which property exemptions you can use on your bankruptcy forms. They are called exemptions because they âexemptâ — or âexcuseâ — certain property from being taken. In most cases, exemptions protect most day-to-day items that you own, unless you have expensive property like a house or a car.
Certain exemptions protect entire categories of property like retirements accounts, regardless of value. Other exemptions only protect specific property like a vehicle up to a certain value.
If you’re looking for a deep understanding of bankruptcy exemptions,read this article.
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What Are Nonexempt Assets
Nonexempt assets are those that can be sold by the trustee assigned to your case by a bankruptcy court. In a Chapter 7 bankruptcy, the proceeds from the sale of these assets are used to pay off or partially pay off some or all of your creditors.
The following items are generally considered nonexempt assets and can be used to repay your creditors:
- A house or other residential property thats not your primary home
- A newer model vehicle in which you have equity
- Expensive musical instruments that arent needed for your profession
- A valuable stamp or coin collection
- Investments that aren’t held in retirement accounts
- Valuable artwork
- Expensive clothing
If you do not have any nonexempt assets, your case is called a no asset case. There is no property for the bankruptcy court to sell, and your creditors wont receive any payments as a result of your bankruptcy case.
Exempt assets that typically can not be sold to pay creditors include:
- A car in which you have only minimal equity
- Furniture and everyday clothing
Exempt assets generally consist of things you need to live or work.
What Is Chapter 12 Bankruptcy
Chapter 12 bankruptcy is for family fishermen and family farmers who have regular annual income. Under Chapter 12, qualified debtors must propose a repayment plan to creditors, to settle debts over an agreed period. Usually, Chapter 12 bankruptcy takes between three and five years. The court may not approve a plan longer than five years.
Corporations, partnerships, couples, and individuals in the fishing or farming business may file for bankruptcy. However, federal law sets a few requirements. Firstly, the total amount of secured and unsecured debt should not be higher than $4,153,150 for a farming business, or $1,924,550 for a fishing operation. Also, 50% of the farmer’s total debt must come from the business, while a fisherman may only qualify if 80% of the debt is from the business.
Corporations and partnerships applying for Chapter 12 bankruptcy must also meet certain requirements. In addition to the above limits, one family must own over 50% of all the partnership or corporation’s outstanding equity or stock. Furthermore, corporations that issue publicly traded stock do not qualify.
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Assets That Do Not Have Special Exemptions In Chapter 7 Bankruptcy
- Any cars that are in addition to your primary vehicle
- Any homes aside from your primary residence
- Bank accounts, stocks, and bonds
- tax refunds to include amounts due to earned income credit
- garnished wages
- Personal collections
Even though this is how property will generally be classified in Chapter 7, it’s certainly not the rule. Chapter 7 is filled with exceptions and you need an experienced Virginia Beach bankruptcy lawyer who will be able to make sure all of your property is protected. For additional information about protecting your assets, check out my article on “How to Lose Money in Bankruptcy“
While It may feel like so many things you own can be taken from you, in the vast majority of my cases, my clients do not lose anything. Start planning right now to hold onto the possessions you need when discharging your debts. Contact us or call 757-276-6555 for a free Chapter 7 bankruptcy consultation. Don’t lose your assets by trying to do this on your own.
This Firm is a Debt Relief Agency. We assist individuals to become debt free through bankruptcy.
This Firm is a Debt Relief Agency. We assist individuals to become debt free through bankruptcy.
How Can Our North Carolina Bankruptcy Lawyers Help You
At the Sasser Law Firm, we are committed to helping individuals and families get a fresh start financially. We pride ourselves on being honest and open about what we think would be best for you, especially if we think there are ways you could avoid bankruptcy.
Since our firms founding, we have handled more than 8,500 bankruptcy cases, and we have extensive experience in both emergency and complex cases. Schedule a free consultation with our team today to talk about your case.
When you choose the Sasser Law Firm, you will work directly with a board-certified attorney, not a paralegal or a legal assistant. Our North Carolina bankruptcy law firm serves clients throughout the state, including in Wake, Harnett, Johnston, Durham, Orange, Granville, Vance, Franklin, Warren, Nash, Lee, Chatham, and Moore counties.
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What If The Trustee Finds Assets Later
In some cases, a Chapter 7 debtor tries to conceal assets from a bankruptcy trustee so that they do not need to surrender them. Or they may genuinely forget about a certain asset that they own. If the trustee later discovers the asset during the course of investigating the debtors situation, they can notify creditors about it. Creditors then can submit proofs of claim to collect on their debts from the non-exempt asset.
The debtor also may face penalties if they deliberately concealed an asset, and their right to continue with a Chapter 7 bankruptcy may be challenged. Therefore, you should make sure to disclose all of your assets to the best of your knowledge. If you are filing under Chapter 7 despite having non-exempt assets, you may want to consider whether Chapter 13 would be a better solution for you. Just because you meet the means test or an exemption from it does not mean that you are ineligible for Chapter 13.
Chapter 7 Vs Chapter 13
Chapter 7 and Chapter 13 are the two most common types of personal bankruptcy.
In a Chapter 7 bankruptcy, a trustee appointed by the bankruptcy court will liquidate many of your assets and use the proceeds to pay your creditors some portion of what you owe them. Certain assets are exempt from liquidation. Those typically include part of the equity in your home and automobile, clothing, any tools you need for your work, pensions, and Social Security benefits.
Your nonexempt assets that can be sold off by the trustee include property , a second car or truck, recreational vehicles, boats, collections or other valuable items, and bank and investment accounts.
In Chapter 7, your debts are typically discharged about four months after you file your bankruptcy petition, according to the Administrative Office of the U.S. Courts.
In a Chapter 13 bankruptcy, by contrast, you commit to repaying an agreed-upon portion of your debts over a period of three to five years. As long as you meet the terms of the agreement, you are allowed to keep your otherwise-nonexempt assets. At the end of the period, your remaining debts are discharged.
In general, people with fewer financial resources choose Chapter 7. In fact, to be eligible for Chapter 7, you must submit to a means test, proving that you would be unable to repay your debts. Otherwise, the court may determine that Chapter 13 is your only option.
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The Bankruptcy Means Test
The preliminary test to determine whether or not you qualify for a chapter 7 bankruptcy is to compare your current income to the median income for North Carolina. If you make less than the state median, youll almost always qualify for a chapter 7. If you make more, then Chapter 13 might work better for you.
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records failed to explain satisfactorily any loss of assets committed a bankruptcy crime such as perjury failed to obey a lawful order of the bankruptcy court fraudulently transferred, concealed, or destroyed property that would have become property of the estate or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727 Fed. R. Bankr. P. 4005.
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How To Claim Your Exemptions
To claim your Chapter 7 bankruptcy exemptions, you must list them under your Schedule C: The Property You Claim As Exempt. Itâs important to list all the property that you want to protect on your Schedule C.
Anything that you do not claim as exempt, regardless of if itâs eligible for protection or not, will not be counted as exempt. This means that even if your property falls within your exemption limit but you do not claim it, your bankruptcy trustee is still allowed to sell it.
Wildcard Exemptions In Chapter 7
Many states have an exemption known as a wildcard exemption that can apply for a certain amount of value to any type of asset. If you want to protect a certain asset for which a specific exemption is not adequate, you can stack the wildcard exemption on the exemption for that asset to prevent losing it. For instance, you might be able to stack the wildcard exemption on the motor vehicle exemption to protect a car that is worth more than the value of the exemption by itself. Alternatively, you can use the wildcard exemption to cover an asset for which there is no specific exemption.
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Wages Benefits And Retirement Accounts
Wages that you earned before your filing date but don’t receive until after filing your case are usually only partially protected. Any post-bankruptcy earnings are completely exempt in a Chapter 7 filing.
Welfare benefits and retirement accounts are almost always protected– but only if you list them on your paperwork. Social Security, unemployment benefits, 401, disability benefits, veteran benefits, etc., are all protected by federal law.
However, if you have a lot of money saved in any of these accounts, it might be wise to talk to an attorney.
Understanding Chapter 7 Bankruptcy Exemptions In Texas
Since I practice bankruptcy law in Texas, and 98% of the time I use Texas law to determine my clients exemptions, my comments are going to be directly specifically at Texas and Federal exemptions which I am allowed to use in Texas.
Under Texas and Federal exemptions, it is really hard to lose an asset in a bankruptcy.
The vast majority of the bankruptcies I have filed are no-asset Chapter 7 bankruptcies. That means I was able to exempt every asset the individual had, so they kept all of their property.
To determine if you qualify for a no-asset bankruptcy, you should speak to an experienced Chapter 7 lawyer who can review your individual circumstances.
For your reference, I typically only work on one to two asset cases a year. That should give you some perspective as to how rare asset Chapter 7 bankruptcies are in Waco, Texas where I practice.
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The Most Common Chapter 7 Exemptions
Even though every state will handle Chapter 7 bankruptcy exemptions a little differently, there are some common types of property that are usually protected. For example, your car, home, and clothes are usually protected. However, collectibles, investments, and vacation homes are less likely to be exempt.
Again, the Chapter 7 bankruptcy exemptions will vary by state and federal laws, so the following is only a rough guideline. For more specific information, research the laws in your area or consult with a bankruptcy attorney.
What Is The Downside Of Filing For Bankruptcy
There are several disadvantages to filing for bankruptcy. Although the bankruptcy system provides respite to persons with heavy debt, interested petitioners should be mindful of the following downsides.
Timing Rules And Bankruptcy Exemption Selection
Some states have significantly more generous bankruptcy exemptions than others. But you can’t move there and immediately use them. To prevent abuse, you must live in the state for at least two yearsotherwise, you’ll use the previous state’s exemptions. Here’s how it works.
If you’ve made your permanent home in your current state for at least two years, you can use the state’s exemptions .
If your domicile hasn’t been in the same state for two years, the rules get more complicated. So prepare yourselfthis is going to sound strange. But we’ll explain it two ways so you’ll know you didn’t read it wrong. Here’s the first way: You’ll choose the state that you lived in the longest during the 180 days immediately before the two years before filing.
Did you get that? Here’s the second explanation, just in case. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.
Still confusing? Let’s try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you’d qualify to use the exemptions of whichever state you resided in the most during the July 1, 2019, through December 31, 2019 period. You wouldn’t have to file your case there, but you’d use that state’s exemptions. Hopefully, that helps!