North Carolina Bankruptcy Laws and North Carolina Bankruptcy Attorney

What Can I Keep?

If there is no equity in your house (today's value less costs of sale less payoff balances on all liens and mortgages), the trustee in a Chapter 7 bankruptcy law will abandon the house to you. That is, you keep it, as long as you keep the mortgages current.

The North Carolina bankruptcy law does not wipe out voluntary liens, like mortgages and deeds of trust, or tax liens. So the lender still has the right to foreclose if you do not pay. If you pay, everyone is happy. Remember, the lender does not want the property; it wants you to pay regularly on the loan. Foreclosure is a last resort for the lender if it concludes it can't get the owed money any other way.

If there is less than $10,000 in equity in your house, you can claim a "homestead exemption" and keep the house, as long as you pay the mortgages. If there is more than $10,000 in equity, it is possible you could lose your home. In that case, you may wish to consider a Chapter 13 bankruptcy attorney.

If there is no equity in your car, after subtracting any car loans and exemption from the car's present value, the bankruptcy trustee will not take the car.

If there is more than $1,500 equity in your car and you bought the car more than 90 days before you filed for bankruptcy, you may be able to pay the difference between the value of the car and the $1,500 equity allowed to the Chapter 7 trustee and keep the car.

If you still owe money on the car, you can choose to reaffirm the debt to the secured lender. Under the new law, you have to reaffirm your car loan within 45 days after the "341 meeting." You no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.

You also have the option to redeem the car within 45 days of the "341 meeting" by buying it from the secured creditor in a single payment for its present value.

Under North Carolina bankruptcy law, you can keep:

• Household furnishings and goods, clothes, appliances, books, animals, crops and musical instruments, up to a total value of $3,500 for you (the debtor), plus an additional $750 for each of your dependents, up to a total value of $3,000 for your dependents, but not including any assets purchased less than 90 days before you filed for bankruptcy
• Your interest in any property, but not including any assets purchased less than 90 days before you filed for bankruptcy, up to a total value of $3,500, less any amount of the homestead exemption you've used
• Professional books and tools of your trade, up to $750 in total value, but not including any assets you bought less than 90 days before you filed for bankruptcy
• Life insurance proceeds
• Any professionally prescribed health aids
• Compensation for personal injury or death
• Individual retirement accounts and annuities
• Public employee pensions
• AFDC, special adult assistance and aid to the blind
• Crime victims', unemployment and workers' compensation
• Property of a business partnership

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