Your home is the most important asset you own. It is normal for people to worry about losing their house if they are facing bankruptcy.
Under both Chapter 7 and Chapter 13, you will initially experience a reprieve, automatic stay, from any late payments or threat of foreclosure. An automatic stay occurs immediately upon the filing of your bankruptcy petition. Creditors, including mortgage servicers, are forbidden from trying to contact you or collect money.
The automatic stay lasts for the duration of your bankruptcy filing. It may not apply, however, if a creditor or the trustee can persuade the Bankruptcy Judge to “lift” the stay. If you have a lot of equity, it is easier to keep your house in Chapter 13 than in Chapter 7. In a Chapter 13 plan, you will make arrangements to repay any past due house payments, and possibly lower the amount of your monthly payment as well.
Things can get trickier in a Chapter 7. A trustee’s job is to search for property he or she can sell to repay your creditors. He or she may be interested in selling your home if there will be money left to give to creditors.
You should speak to a HUD-approved counselor at (877) 622-8525 about refinancing your payments before filing for bankruptcy. In addition, you must affirm what you owe on your mortgage (agree to repay). If you do not affirm your debt, it will be cancelled in the bankruptcy, but you will no longer own your home.
If you are facing foreclosure, bankruptcy may be a good option for you. The advantage of bankruptcy is that, if your house is sold at a foreclosure sale, you will not be liable for the deficiency, or amount still owed after the house is sold. To keep your house in a Chapter 7, you must be current on your payments.
A trustee may make the decision whether to sell your home based upon the amount of equity you have in your house. NC allows debtors to keep $35,000 of the equity in their house if it is sold ($70,000 for couples). A wildcard exemption (wildcards can be applied to any type of property) of $5,000 may also be added to the amount of sales money you can keep.
See a bankruptcy attorney if you are worried about the possibility of losing your home. He or she can counsel you on options, and determine whether Chapter 7 or 13 is a good financial strategy for you.
Don’t go into the bankruptcy process alone. Let a caring, experienced bankruptcy attorney help you. Call the Law Office of Rebecca Darchuk at (828) 505-1052, or email her at firstname.lastname@example.org for a free consultation.