Bankruptcy and Your Property

A collection of frequently asked questions about how bankruptcy affects your property as a debtor.

Can Chapter 7 Bankruptcy Stop Foreclosure?

The answer to this question is a clear "sort of". While the filing of a chapter 7 bankruptcy will stop a foreclosure sale, it will seldom prevent the eventual foreclosure.

Can bankruptcy help if I pledged my household goods as collateral?

Sometimes, a financing company will ask a borrower to sign papers pledging various household property (such as furniture, televisions, and appliances) as collateral to secure a new loan. Done properly, the creditor then has a legal right to demand turnover of the existing household property if the loan goes unpaid.

How can I keep my stuff in bankruptcy?

At our firm, we understand that two top concerns for many people considering bankruptcy are (1) keeping their possessions and (2) obtaining peace from worry over debt collection. For most individuals, there are bankruptcy options to keep most types of property.

How does Chapter 7 help when I am giving up a house to foreclosure?

Sometimes, a house becomes too expensive for its owners to continuing living in and paying the mortgage. Changes in income can make what was once affordable now unmanageable. Problems with a house or mortgage terms can push the cost of ownership beyond one's means. Sometimes, there are opportunities to work things out the mortgage. Other times, the smart decision is to walk away from the house and allow the bank to foreclose.

What are the exemptions available in North Carolina?

North Carolina opted out the federal bankruptcy exemptions for its residents, so the state law exemptions are the exemptions applicable for North Carolina residents in bankruptcy.

What is the Chapter 13 "liquidation test"?

When an individual files chapter 13 bankruptcy, they have decided to voluntarily commit future income for paying certain debts. This type of bankruptcy uses a court approved plan to determine which creditors are paid what, and how much the debtor must pay to the

What happens to my car lease in bankruptcy?

If you lease your car instead of owning and financing it, bankruptcy treats this automobile lease obligation differently than a secured car installment loan. In bankruptcy, leases are either assumed or rejected. An assumed lease continues on its own terms, while a rejected lease ends. In event of rejection, the car will be returned to the creditor for sale.

What is a Motion for Relief from the Stay?

A motion for relief from the automatic stay is a common motion brought by a creditor, who wishes to take action that would otherwise be barred by the bankruptcy automatic stay. Most frequently, a motion for relief seeks court permission to foreclose on real estate or repossess a car or other vehicle. A motion might also be brought to in order to continue a legal proceeding outside of bankruptcy.

What are the common exemptions claimed by North Carolina debtors?

In bankruptcy, exemptions function as property allowance which enable a debtor to keep property through bankruptcy. Each state has its own exemption under state law, and there are also federal bankruptcy exemptions that are applicable in some situations. There are timing requirements not discussed in this answer, but residents of North Carolina will typically claim North Carolina Statutory exemptions. Several are very frequently claimed, including the homestead exemption, the motor vehicle exemption, the household property exemption, and the wild card exemption.

How can I keep property that I cannot exempt?

Exemptions are powerful property allowances that permit many debtors to keep most or all of their property in bankruptcy. However, some exemptions are limited in dollar value and cannot completely protect property from bankruptcy. Fortunately, there are options. Chapter 13 bankruptcy allows debtors to keep their property, paying an amount equal to the non-exempt value of their property over up to 5 years. In some cases, the plan will already require a greater payment amount and keeping the property will add no extra cost.


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