For many of us, our homes represent our greatest investment, both in money and time. But it can also represent our largest debt. When our debts become overwhelming, our focus turns from trying to pay everything to trying to keep as many assets as possible. If you are about to lose your home, will bankruptcy help? The answer is not always simple.
The word ‘foreclosure’ means that the mortgagor of a property (the lender) takes the property of a mortgagee (the person who bought the property) because the mortgagee failed to make their mortgage payments.
Generally, lenders put foreclosure properties up for sale or sell them at an auction. They apply the sales proceeds to the debt. The former property owner loses all rights to the property or the proceeds.
There are several types of North Carolina foreclosures:
- Power of Sale. A court has to allow the sale but might deny a power of sale foreclosure.
- Civil Action. The lender files in a district or superior court.
- Tax. Government entities can foreclose on a property because of unpaid property taxes.
- Homeowners’ or Condominium Owners’ Association. Either of these associations may file a claim on property when the owner does not pay the required assessments.
Property owners who face foreclosure can contact their lenders and try to avoid foreclosure. But lenders and other consumer agencies sometimes are not the answer. As noted below, bankruptcy might help some people save their homes.
Bankruptcy Help Might Be Available
Chapter 7 and Chapter 13 bankruptcies are the ones commonly filed by consumers.
People filing Chapter 7 may qualify to have all their debts wiped out. However, some property might be sold to cover your debts. How does this help with foreclosure, then? It wipes the debt out of your life but does not help you keep your home. It is possible to keep your home under certain conditions. The Bankruptcy Court will review how much equity you have in your home before making a decision. In the meantime, foreclosure and other collection efforts should stop as soon as you file your bankruptcy petition. This gives you time to find another place to live and move.
Chapter 13 takes a different approach to debt. This does not help you keep your home. Borrowers typically work with a bankruptcy administrator to form a repayment plan. Many of the borrower’s debts will be paid at least in part if the borrower completes the repayment plan. Filing a Chapter 13 when facing foreclosure can give you some much-needed space to get your payments caught up over time. As with a Chapter 7, foreclosure and collection efforts should be automatically stayed as soon as you file.
North Carolina Bankruptcy Exemptions
As with any legal matter, it is essential to discuss your case with an experienced attorney before taking any action. For example, you might overlook important exemptions under North Carolina bankruptcy laws.
The homestead exemption allows you to protect some of the equity in your home. Single homeowners can claim up to $35,000. Married couples can claim exemptions of up to $70,000. In some cases, people who are at least age 65 can claim up to $60,000.
Will Bankruptcy Help You Keep Your Home? Please Give Us a Call.
Filing a Chapter 13 bankruptcy might protect your home from foreclosure. Please contact us as soon as possible to discuss your case.
Attorney Leslie Craft has the experience you need to deal with bankruptcy. Ms. Craft’s goal is always to help her clients get past their legal problems and get on with their lives. Consultations are free and only take about 30 – 45 minutes of your time. Your options may surprise and even excite you!
To schedule a free personal consultation, call Craft Law Offices at (252) 752-0297 or email us at firstname.lastname@example.org. My offices are located in Greenville, Morehead City, and Rocky Mount for your convenience. I also represent clients in surrounding Eastern North Carolina communities, including Warrenton, Elizabeth City, Roanoke Rapids, Goldsboro, and Jacksonville.
Bankruptcy Doesn’t Have to Be a Painful Process.