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July 2014 News

On July 28, 2014 Partner Darren McDonough and IMGT successfully defended a foreclosure action where IMGT’s client had made an agreement with the Bank to satisfy the mortgage. The client paid the agreed upon amount and the Bank still filed the foreclosure action. IMGT and Partner Darren McDonough were able to get the bank to dismiss the foreclosure action. Making sure that IMGT fully represented our clients interests, Darren McDonough wasn’t satisfied with just getting the foreclosure action dismissed. Instead, IMGT and our client then instituted an action to get the outstanding mortgage cancelled with no additional payment, which resulted in a positive result for our client.

On July 24-27, 2014 Partner Samantha K Brumbaugh attended the American Bankruptcy Institute‘s 19th Annual Southeast Bankruptcy Conference, held in Amelia Island, Florida. The American Bankruptcy Institute (ABI) is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. At the conference, Samantha K Brumbaugh attended seminars and workshops presented by some of the leading bankruptcy attorneys in practice today, as well as presentations by several Federal Bankruptcy Judges. IMGT was proud to send Samantha to this conference, and is excited to see the new and innovative strategies and approaches she has picked up from the conference.

On July 18, 2014 Partner Darren McDonough and IMGT successfully defended an action for alienation of affections and criminal conversation. The plaintiff sought damages against the IMGT client in excess of $10,000. After completing discovery and mediation, the plaintiff took a dismissal of all claims, which was filed on July 18th. This is the second action for alienation of affection and criminal conversation that Darren McDonough has successfully defended in the last couple of years. The prior action involved a claim for $1,000,000 that settled just before a jury was picked, with a dismissal of the criminal conversation claim and a settlement of $50 for the alienation of affection claim.

July 4, 2014 – IMGT would like to wish everyone a Happy Independence day and extend a thank you to all those who served. Happy July 4th!

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Differences Between Personal Chapter 7 Bankruptcy and Chapter 13 Bankruptcy

Chapter 7 and chapter 13 bankruptcies each have their own advantages and disadvantages. However the main difference between chapter 7 bankruptcy and chapter 13 bankruptcy for an individual or a couple is usually about the retention of property. The most common question asked is, “Will I get to keep my house” although some wish to know whether they keep their vehicle or other assets. The answer to this depends on a number of factors, including the exemptions a person can claim, the equity that exists in the asset, and whether the bankruptcy petition is filed under chapter 7 or 13.

In Chapter 13 bankruptcy, the debtor files a repayment plan to pay all or a portion of the person’s debts owed over a given period of time. The repayment amount depends upon a number of factors, including the debtor’s income or earnings, how much property is owned, and the amount and type of debts owed. It is understood that, under Chapter 13 bankruptcy law, real property is often retained because the debtor is making the debts current, or paying off the debts, on properties they wish to keep.

Chapter 7 bankruptcy is different in that, although the court discharges most of the debts, the trustee can take any property the debtor had an ownership interest in that is not exempt under State or Federal law, sell it, then distribute the proceeds to creditors. The keyword is exemption and it is important to note that Federal bankruptcy exemptions are not available in North Carolina. The bankruptcy court will abide by the exemptions provided under North Carolina statute. Some of the exemptions that are most relevant to individuals are, as of this writing (5/7/2014):

  • The Homestead exemption which allows the debtor up to $35,000 in equity in real property. This amount can be claimed by each spouse, otherwise known as doubling, up to $70,000 in equity. If the debtor is 65 years or older, the allowable exemption is $60,000 as long as the property is deeded to tenants by entirety or jointly with rights of survivorship and the spouse is deceased.
  • Personal property exemption, such as furnishings, appliances and clothing, not to exceed $5000 for the debtor and $1000 for each dependent up to $4000 so long as the property was not purchased within 90 days of filing bankruptcy. *
  • One automobile in which the debtor’s interest does not exceed $3500.*
  • Cash value of insurance plans as described in Article X, Section 5 of the Constitution of North Carolina, of which a spouse or a dependent is the beneficiary.
  • Retirement benefits, annuities, and trusts as described in section 408 of the Internal Revenue Code.
  • Up to $2000 worth of Implements, tools, professional books, or tools of the trade used for work so long as these were purchased more than 90 days prior to filing bankruptcy.*
  • A “wild card” of any unused portion of the Homestead exemption, with a maximum of $5,000, to be applied to anything the debtor desires. Most individuals use this “wild card” exemption to protect cash, bank accounts, nonexempt equity in automobiles (or a second automobile) or any other item owned by the debtor, so long as it is worth less than the “wild card” amount, in the aggregate.

 

*It is important to note that any property on which you still owe is subject to repossession if payments are not kept current in a Chapter 7 context. Any amounts described above are subject to change.

The list of exemptions for North Carolinians can be found at N.C. Gen. Stat. § 1C-1601 (a). Due to the complexity of Federal bankruptcy and State collection laws and its propensity for constant change, it is highly recommended that you seek the legal advice of a bankruptcy attorney at IMGT. Contact us today to schedule your consultation with one of our attorneys.

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