How you can save your home using bankruptcy
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One of the primary concerns for North Carolina consumers stuck with overwhelming debt is protecting their homes. You may have read that if you file NC bankruptcy, your home will be taken away from you. In fact, a popular phrase used when it comes to bankruptcy is “seized assets,” which sounds dire. But the reality is that there are laws in place to protect your assets – including your home – during bankruptcy.
What Determines if You Might Lose Your Home if You File Bankruptcy?
There are two circumstances that can cause you to lose your home in Chapter 7 bankruptcy. The first is if you are extremely delinquent on your house payments, your lender does not want to refinance and you cannot get another lender to refinance. The second is if you have substantial equity in your home (i.e. more than $35k for an individual bankruptcy filer or more than $70k for a married couple filing bankruptcy).
How Can You Protect Your Home During Bankruptcy?
If you are current on your mortgage payments, your main concern should be your equity. If you are filing individually and have more than $35k of equity in your home, choosing Chapter 13 bankruptcy may be the best option for trying to save it. If you have less than $35k of equity, and your income to debt ratio allows you to file Chapter 7, this option will typically relieve you of more debt. (If you’re filing joint North Carolina bankruptcy as a couple, note that you can actually shield $70k of equity.)
If you are delinquent on your mortgage payments and your lender is threatening to foreclose, Chapter 13 can allow you time to catch up on the past-due balance to save your home. Another alternative is to apply for a refinance, whether through a private lender or through a HAMP or HARP modification. If you choose Chapter 7 bankruptcy and are behind on mortgage payments, you may face foreclosure – but if you have no equity, this might not be a big deal.
Should You Protect Your Home?
If you cannot afford your mortgage payments, that’s a sign of a larger problem. If you had an adjustable rate mortgage, perhaps your payments have increased to the point of unaffordability. Or perhaps your income has dropped and a payment that was once affordable is no longer. In this case, selling or giving up the home is likely a better course of action. Trying to hang on to a home you cannot afford is not wise and can cause increasing financial problems.
Many North Carolina consumers don’t like the idea of giving up their home – even when it’s a home they know they can’t afford. But this is a financial trap that you don’t want to remain in – it can ruin your finances for good. If you file Chapter 7 or Chapter 13 bankruptcy and get your unaffordable debt discharged, you can get a fresh start and the financial peace of mind you need.
Don’t let your financial problems control you – instead get control of your finances so you can enjoy a brighter financial future. To find out more about the benefits of North Carolina bankruptcy and how it can help you protect your home equity, contact the Law Offices of John T. Orcutt today. Call +1-919-646-2654 now for a free NC bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.