Thousands of people in eastern North Carolina have been dislocated and their lives disrupted by the historic flooding caused by Hurricane Florence. If you are struggling to meet your bankruptcy payment obligations while dealing with the effects of the hurricane, you may be able to get some relief.
Recognizing the difficult circumstances that many North Carolinians face, the U.S. Bankruptcy Court for the Eastern District of North Carolina announced a series of changes to its normal rules and administrative procedures to accommodate those who are going through bankruptcy and have been harmed by the flooding.
The local rule changes include the following:
- If you have experienced an emergency and are unable to make the monthly installment payments authorized as part of a Chapter 13 bankruptcy reorganization plan, you may be able to obtain a waiver of payment. The court is suspending the usual limits on waivers of payments in Chapter 13 cases. The court said trustees handling these cases may authorize as many waivers of payment as appear reasonably necessary.
- If you need to purchase a house to replace flood-damaged property while in bankruptcy, the court is granting people in bankruptcy more flexibility to incur debt and buy real estate to the extent reasonably necessary. The court has temporarily suspended its rule that a debtor must have court approval to purchase property or incur debt of more than $7,500. Under the change, the court said if the amount of debt or purchase exceeds $7,500, a debtor will only need the approval of the Chapter 13 trustee. However, if the trustee objects to the purchase, the matter must be presented to the court for approval.
- Bankruptcy trustees handling Chapters 7, 12 and 13 cases will have authority to suspend and reschedule to a later date the meeting of creditors mandated under Section 341 of the bankruptcy code without filing a motion or obtaining a court approval to do so. These meetings are often referred to as 341 hearings.
- Given the widespread destruction of property and loss of employment, the court anticipates that many people currently in Chapter 13 reorganizations will need to modify their repayment plans to address changed circumstances due to flood-related losses. The court said it would act on these requests expeditiously. Any motions to modify a repayment plan should recount the loss of property and employment due to the hurricane as well as any pending insurance claims or receipt of insurance payments or disaster relief funds.
- The court also anticipates that many debtors will be unable to meet payment obligations set forth in court orders to address previous defaults with secured creditors or trustees. Attorneys for people who have sustained flood-related losses may request that the court modify the default provisions of a court order if the parties cannot come to an agreement on an extension of time to make meet the payment obligations.
- The court recognizes that many people living in eastern North Carolina are currently displaced and difficult to reach. In cases in which a creditor has filed for a judgment on the basis of no response, the court will not enter a default judgment solely on the basis that no response was filed, unless the court is persuaded that actual notice was received by the respondent.
Rule Changes Will Remain in Effect for Remainder of 2018
It is important to have a clear understanding of your legal options if have been adversely affected by Hurricane Florence and you are going through bankruptcy in North Carolina. We expect these rule changes will be helpful to some clients. If you are considering bankruptcy and have questions about your situation, the attorneys at Sasser Law are here to help you understand the choices available to you.
Our board-certified bankruptcy attorneys have helped thousands of North Carolina residents navigate a course through financial hardship and address their debt. Our goal is to help you take all the steps necessary to ease your financial stress and help you get back on firm financial footing. If you are considering bankruptcy and have questions, contact a board-certified attorney at Sasser Law Firm for a free consultation.