If your mortgage lender has already initiated proceedings to foreclose on your home, then filing for bankruptcy under Chapter 7 of the Bankruptcy Code will not stop the foreclosure process; however, it may cause some delay in the process that would allow you to reside in your home a little longer.
If your home is not in the process of foreclosure, then filing for Chapter 7 bankruptcy may be an option that would allow you to keep your home. In North Carolina, an individual who files Chapter 7 bankruptcy may claim a homestead exemption (or net equity allowance) of up to $35,000. For couples who file bankruptcy jointly, the homestead exemption is doubled to $70,000. The homestead exemption is limited to a primary residence.
Filing for Chapter 13 bankruptcy will generally stop a foreclosure on your home; however, timing is of the utmost importance in filing the bankruptcy petition. Under Chapter 13 bankruptcy, debtors must pay their past due mortgage payments under a specific repayment plan over a 3 to 5 year period. Having sufficient income to meet your financial obligations is a requirement for being eligible to file for Chapter 13 bankruptcy. The difficulty with meeting this income requirement is that you must be able to timely pay the current mortgage payments in addition to a portion of the past due payments.
The time frame in which you file bankruptcy may greatly affect a creditor’s ability to foreclose on your home or seize other assets. If you are having financial difficulties and falling behind on your mortgage payments or other debts, it is important that you consult with a bankruptcy attorney as soon as possible. If you reside in Asheville or Western North Carolina, please call our office and schedule an appointment for a free consultation with our experienced bankruptcy attorney.