[Your Name] [Your Address] [City, State, ZIP] [Email Address] [Phone Number] [Date] [Recipient's Name] [Recipient's Address] [City, State, ZIP] Subject: Explanation of Bankruptcy [North Carolina Sample Letter] Dear [Recipient's Name], I hope this letter finds you well. I am writing to provide a detailed explanation for my recent bankruptcy filing, as per your request. The purpose of this letter is to clarify the circumstances that led to my financial distress and emphasize my commitment to taking necessary steps towards long-term financial stability. I would like to begin by providing an overview of the bankruptcy laws in North Carolina, as it sets the legal framework for my actions. Bankruptcy in North Carolina is governed by federal law, specifically the U.S. Bankruptcy Code, which provides individuals with a fresh start by discharging their debts or establishing a repayment plan. There are primarily two types of bankruptcy applicable to individuals namely Chapter 7 and Chapter 13 bankruptcy. Chapter 7 Bankruptcy: In the case of Chapter 7 bankruptcy, also known as liquidation bankruptcy, my understanding is that it involves the liquidation of non-exempt assets to repay creditors and discharge most remaining debts. This type of bankruptcy is suitable for individuals with limited assets and primarily unsecured debts, such as credit card debt or medical bills. Chapter 13 Bankruptcy: Contrarily, Chapter 13 bankruptcy, also termed as reorganization bankruptcy, allows debtors to reorganize their debts and create a feasible repayment plan spanning three to five years. The advantage of Chapter 13 bankruptcy is that it aims to retain property while repaying a portion of the outstanding debt. This chapter is suitable for individuals who have assets they wish to retain but need time to catch up on past-due payments. Now, let me shed light on my personal circumstances that necessitated filing for bankruptcy. [Provide a candid explanation of the events that led to your financial hardship, such as job loss, medical emergencies, divorce, or unexpected expenses]. These factors severely impacted my ability to maintain regular payments towards my debts and unfortunately led me to the decision to pursue bankruptcy as a last resort. Throughout this challenging phase, I have learned valuable lessons about personal finance and budgeting. I am actively working on rebuilding my financial stability by seeking employment opportunities, implementing strict budgetary measures, and exploring credit counseling services. I firmly believe that bankruptcy should not define my financial future but rather serve as a turning point towards a more responsible and sustainable financial life. Furthermore, I understand that bankruptcy is a serious matter, and I take full responsibility for my past financial decisions. With this letter, I hope to provide you with the transparency and assurance you seek regarding my bankruptcy situation and demonstrate my willingness to make amends and move forward. I am more than willing to meet and discuss the details of my financial situation, further emphasizing my determination to honor any obligations I may have towards your institution. Please do not hesitate to reach out to me to arrange a meeting or seek any additional information. Thank you for your understanding and consideration. I sincerely hope that this letter provides you with the required insight into my bankruptcy situation. I am committed to rebuilding my financial stability and look forward to the opportunity of working with you in a mutually beneficial manner in the future. Yours sincerely, [Your Name]
North Carolina Sample Letter for Explanation of Bankruptcy
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How to fill out North Carolina Sample Letter For Explanation Of Bankruptcy?
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FAQ
When drafting a Letter of Explanation for Bankruptcy, you need to state the reason you are submitting this explanation, record the type of bankruptcy you filed for, the timeline of the bankruptcy proceedings, and a brief description of the circumstances that led to the bankruptcy.
The key to writing a great letter of explanation is to keep it short, simple and informative. Be clear and write with as much detail as you can since someone else will need to understand your situation. Avoid including irrelevant information or answers to questions the underwriter didn't ask.
The key to writing a great letter of explanation is to keep it short, simple and informative. Be clear and write with as much detail as you can since someone else will need to understand your situation. Avoid including irrelevant information or answers to questions the underwriter didn't ask.
How to write a letter of explanationFacts. Include all the details with correct dates and dollar amounts.Resolution. Explain how and when the situation was resolved.Acknowledge. It's important that the letter outline why the problem won't arise again. Recognize if and how you could have avoided this mistake.
How to write a letter of explanationThe lender's name and address.Your name and your application number.The date you're submitting the letter and expected closing date (if you know it)A short statement that helps an underwriter fully understand your situation in regards to the reason for concern.More items...?
How to write a letter of explanationThe lender's name and address.Your name and your application number.The date you're submitting the letter and expected closing date (if you know it)A short statement that helps an underwriter fully understand your situation in regards to the reason for concern.More items...?
Begin the letter with the date, a salutation, and an introduction of the incident or issue. Provide a short but detailed description without having to add unnecessary terms and phrases. Provide an explanation of the steps you've taken to rectify the error or to complete the missing information.
In other words, a letter of explanation is exactly what it sounds like. The lender and their underwriter are asking the borrower to explain something. That could be a change in jobs, a gap in employment, a large deposit into their bank account, a source of self-employed income, or just about anything else.
