Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Can I keep my house if I file bankruptcy?”
You may have heard that bankruptcy can put a stop to foreclosure. Is that true? And if it is, is it always the best strategy for those homeowners facing foreclosure proceedings? To find out more, keep reading.
The short answer is yes; bankruptcy can stop a foreclosure from happening. This works because of the automatic stay, which exists whenever a person files for bankruptcy protection. This stay is a court order that prevents all foreclosure proceedings and debt collections from moving forward. This can give the borrower time to get caught up on payments and reorganize other debts to be able to keep the mortgage current in the future.
When is bankruptcy a good option?
Though bankruptcy does work to prevent foreclosure, it may not always be the best bet. For those borrowers who have an ongoing stream of income and can afford their home but need an opportunity to reorganize, bankruptcy might be a good idea and can give you the chance to get your financial house in order. However, for those who simply do not have enough money to afford the house and don’t have a prospect of earning more, then bankruptcy really only delays the inevitable.
What type of bankruptcy is best?
There are two primary kinds of bankruptcy pursued by most North Carolinians: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, a foreclosure is delayed but it often does not end with borrowers keeping the house. That’s because at the end of most Chapter 7 bankruptcies, most remaining assets (like a house) are liquidated (meaning, sold off). Borrowers almost always lose their homes in a Chapter 7 unless they happen to have enough money left at the end to pay off their secured debts (the mortgage) after their unsecured debts have been discharged.
The more popular choice for those trying to keep their house is to file a Chapter 13 bankruptcy which allows debtors to restructure their debts and begin a payment plan for between three and five years. This gives borrowers time to get their finances in order and pay off the most pressing debts. Another benefit of a Chapter 13 is that when the reorganization plan is being crafted, judges have the power to basically dump second mortgages or home equity loans when the value of the home has fallen below the mortgage balance. When the home value has dropped, a judge can simply declare a second mortgage unsecured debt meaning it will be paid off for pennies-on-the dollar, saving the debtor substantial money.
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828 or find more resources here. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.
About The Author:
Bryan Stone is a Partner with Arnold & Smith, PLLC where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord tenant issues. Originally from Macon Georgia, Mr. Stone attended the University of Georgia for a BBA in Banking and Finance and went on to Wake Forest to earn his law degree. After law school Mr. Stone relocated to Charlotte where he has become quite involved in many local organizations. He is currently the Chair of “Bravo!” the young professionals organization of Opera Carolina, he also founded the UGA Alumni Association of Charlotte. In his spare time he enjoys perfecting his BBQ skills for the annual “Q-City BBQ Championships” and playing softball with the Mecklenburg County Bar Softball League.
“Bankruptcy can save your house from foreclosure,” by Les Christie, published at Money.CNN.com.
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