Can I keep my homes if I file bk in NC?

[desperateinNC]

I became disabled in 2006 and lost $130k in personal and husband had to quit his job to care for me losing $35k. We used our life savings to pay our debts and when that ran out we started using our credit cards hoping I would be able to go back to work. I receive small disability. We own two homes, one is our primary residence with mortgage of $250k, value around $390k and we own a second home much smaller value $120k with a mortgage of $12k. We are trying to sell larger home to move to smaller one. The credit card companies are coming after us fast and furious. Most accounts are either mine, or my husband's except two and they are now getting judgments against us for the unsecured debt. He has two accounts that I am an authorized user and they are coming after both of us. Our vehicles are worth less than we owe on them. We are not behind on any mortgage or vehicle. Can we file bankruptcy in North Carolina and keep both homes?

[justbroke]

We are not behind on any mortgage or vehicle. Can we file bankruptcy in North Carolina and keep both homes?

The only way you can keep two homes, is if (a) your plan pays back all unsecured creditors 100% over the 36-60 month plan period, or (b) the second home is an investment home and generates sufficient income to erase all expense for having it.

With regard to option (b), that simply means that the rent must cover PITI (principal, interest, taxes and insurance) and any other upkeep of the property (maintenance). No Trustee will let you have a "business" (as rental properties are considered businesses) which doesn't at least break even.

To compound this situation... if you have a lot of equity in either home, this could make it impossible to keep both. The reason is, that if you qualify for a Chapter 13, you would have to pay back as much money as the creditors would have received had you liquidated ALL OF YOUR PROPERTY.

(Please note, that my samples assumes a Chapter 13 and not a Chapter 7. If you qualify for a Chapter 7, you may still have the equity problems. North Carolina has only a $10,000 homestead exemption, so anything above that for both homes, would be "property of the Estate" and subject to liquidation.)

[desperateinNC]

Is it possible to form an LLC and sell one of the homes to the LLC?

[justbroke]

Is it possible to form an LLC and sell one of the homes to the LLC?

Absolutely not... if you're planning to file Bankruptcy. This would be a "preferential transfer" and the entire sale can be avoided by the Bankruptcy Trustee.

They specifically look for assets that you may be "hiding" by having transferred them to someone else.

[desperateinNC]

I have one home up for sale now. If it sells before I file bankruptcy, what can they do about the equity I receive?

[desperateinNC]

If we are served notices of judgments filed against us, can we exempt our properties by filling out any paperwork to prevent the unsecured debt from attaching to our home? Also, do you know how much a creditor is entitled to in bankruptcy if they take our home?

[JRScott]

You made two threads.

Well since both of you owe the debt the short answer is no. In North Carolina the primary residence of a married couple cannot have a lien against it for judgment purposes so long as only one spouse owes the debt. (Not for single individuals this does not apply only for married).

It would not be possible to keep both homes in a ch 7 bk.

If you live in the Western District of North Carolina (in the Northwestern part of the state...Ashe, Alleghany, Wilkes, Watauga, etc) I can provide you with the name of the lawyer I used. PM me if you'd like that. He only does ch 7s though.

Has the Sheriff's department served any papers yet to you about the debts? Even if they have in the state of North Carolina you have 30 days to respond, plenty of time to file bk if you need to.

Even after the 30 days, they'll have to go to court and get the judgment and then wait for an appeals date to expire (30 days later). Then they'll actually try to collect. Garnishment in North Carolina is not easy.

I suggest starting to see some Bk lawyers now and start getting things together.

[oldrocker]

The NC homestead exemption is $18500, doubled if filing jointly. Unless the original post has some serious typos in it we're talking $248k in equity. You need to talk to a couple of lawyers to see if there is anything you can do. In a 7 the trustee is going to sell both houses, pay off your creditors then whats left after his cut will be given to you.

If you can sell the bigger house and move to the smaller house, you could take the sale proceeds and start wheelin and dealin with your creditors. See what they will take to settle.