I recently returned to work after being a stay at home mom. When I quit working I stopped paying on one large credit card. They took this all the way to judgement and are now trying to garnish my wages with my new employer. I am a mortgage processor and am wondering if I file bankruptcy will it affect my NMLS? My second question is will I even qualify for bankruptcy at this point? The judgement is for about $10,000.  I can’t afford the $400 per paycheck garnishment. I’m going to see if they will take a settlement but if they don’t, bankruptcy is my only other option. I’m just worried I make too much money now to file bankruptcy. Any advice or experiences you’ve had would be great to hear. Just trying to figure out the best way to move forward.

The Nationwide Multistate Licensing System & Registry (NMLS) is the agency that regulates those who originate mortgage loans. Because these individuals handle sensitive financial information and are responsible for ensuring the integrity of our nation’s mortgage lending industry, mortgage originators are subject to many regulations that affect their license.

Generally speaking, the filing of a bankruptcy case does not threaten the license of a mortgage originator, but the filing of a bankruptcy must be reported on license applications and renewals. Some state’s require that a copy of the bankruptcy petition be provided along with an explanation of the circumstances surrounding the filing.

Income Requirements to File Bankruptcy.

There are income limits to qualify for Chapter 7 bankruptcy based on the size of a debtor’s household.  The income limits are adjusted every six months to stay current with the average income in each state, and the median income figures for Nebraska as of January 2020 are as follows:

1 Earner 2 People 3 People 4 People 5 People
$ 48,796 $ 68,061 $ 77,274 $ 93,747 $ 102,747

If your income is below these median income figures, you should qualify for Chapter 7 (unless it is abundantly clear that you have excess income available to repay a significant portion of the debt).  However, if your income is slightly over median income, a person may still qualify for Chapter 7 after taking into account such monthly expenses as mortgage payments, auto loans, health care expenses, etc.  In addition, not all types of income count, such as Social Security or Veterans benefits that are excluded from median income calculations.

Even if your income is too high to qualify for Chapter 7, you always have the right to file for the repayment bankruptcy of Chapter 13.  In Chapter 13 you repay  a portion of what you owe based on your income over a 3 to 5 year period of time, and the unpaid portion is discharged at the end of the case. While you are in Chapter 13 creditors may not garnish paychecks or bank accounts.

Is this enough debt to justify filing bankruptcy?

Given that your income is on the rise and that you question whether you even qualify for bankruptcy, it may be that working out a payment agreement or settlement with your judgment creditor may be the better option.

A good bankruptcy attorney not only helps guide clients through the bankruptcy process, but they actually help clients to avoid filing bankruptcy by working with creditors to set up payment plans and settlements. In fact, bankruptcy attorneys are usually the most effective attorneys to negotiate settlements since they routinely work with creditor attorneys on a daily basis.


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