The NC Bankruptcy Law Firm

3.      Can I keep my property?

You most likely will not lose your home, car, or other assets and property during the bankruptcy process. Bankruptcy was established to help people who have fallen behind financially or who are struggling with insurmountable debt. In the vast majority of the bankruptcy cases, clients are able to keep their homes, cars, and other assets.

North Carolina law allows each spouse or individual to keep $18,500 equity in a homestead. A homestead is defined as your personal residence (mobile home or house plus land) that you are living in at the time of the bankruptcy filing. Equity is determined by subtracting the amount that you owe on your mortgage(s) from the fair market value of your home.

If your home equity does not exceed $18,500 ($37,000 for married couple and many widowed spouses) you should not have a problem keeping your home in a Chapter 7, as long as you are current on your house payments both at the time of filing and also in subsequent months. If your equity exceeds the allowed exemption or if you are behind in your payments, a Chapter 13 might allow you to save your home.

The automatic stay protects you from foreclosure of your house during the time your bankruptcy case is open. However, if your payments fall behind after filing, the bank may ask for court permission to lift the automatic stay and begin foreclosure proceedings

To help determine the value of your home, review any recent appraisals of your home, or check with your county tax department for the current tax value assessment of your real property.

North Carolina state law allows each individual to keep $3,500 equity in a motor vehicle. To determine the amount of equity you have, we will need an accurate current RETAIL market value of all of your vehicles as well as the payoff amount. You may obtain the retail value of your vehicle online for free at www.nadaguides.com -- If your equity exceeds the $3,500 mark, other exemptions might allow you to protect up to $8,500 in your vehicle equity.

If you have a loan on your vehicle, you MUST keep the payments current during and after the bankruptcy to avoid repossession.

If your car is "upside down," meaning you owe more than it's worth, we recommend that you look into the possibility of surrendering the vehicle, which allows you to get out from under that crushing monthly debt and purchase or finance a less expensive car after bankruptcy. Another possibility is to “redeem” the vehicle by paying the current retail value of the vehicle, and the remaining loan balance would be discharged. We may be able to assist you in finding a lender that will give you a new loan to pay this redemption amount to your existing lender, which could save you thousands of dollars compared to your current vehicle loan.