When a personal finance matter turns into a legal matter, it’s time to act quickly. I got a call yesterday from an individual who received a Motion To Claim Exempt Property. He was confused by the language used in the motion, and of course wanted guidance on what to do next. In one quick phone call, we discussed the motion, I asked a few questions about his finances and we decided together how to respond.

If you receive this document, it is because a creditor has obtained a judgment against you. It should be regarded as a clear sign that the creditor is attempting to collect on the judgment. While that may cause anxiety, the Motion To Claim Exempt Property is actually reminding you that you have rights, and is giving you a chance to exercise those rights.

Once you receive this notice, you have twenty days to respond by filing a written response with the court. If you fail to file the response, you waive your right to the exemptions (protections) that the state offers. These protections are similar to the protections you have by law when filing a bankruptcy, so a bankruptcy attorney is the right person to speak to when you receive the motion.

With the help of an attorney, you can either fill out the form and submit it to the court, or you can file a bankruptcy petition which puts a stay on the collection process by notifying ALL creditors that you have chosen to file a Chapter 7 or Chapter 13 bankruptcy.

Equity in the following items is protected or exempted by the state:

Your residence: $35,000 (single) $70,000 (married)

Your car: $3,500

Miscellaneous items (“Wild card”): $5,000

Other household items: $5,000 (single) $10,000 (married)

Other—Some items like 401k through an employer or IRA accounts of your own may be entirely protected. Your lawyer can assist in making that determination for you

 Let me help you relieve some of this stress and move forward confidently. Whether you choose to file the response yourself, file it with an attorney, or file a bankruptcy with a lawyer in Charlotte, The important thing to do is ACT NOW. Call me at 704.749.7747 to discuss the options and decide today what’s best for you.

The North Carolina Homestead Exemption

Most people who call me about filing a bankruptcy in Charlotte want to know what will happen to their home if they file. Fortunately, the answer is usually a good one. North Carolina has something called a Homestead Exemption which protects some or all of the equity in your home.

For instance, if you are a homeowner filing separately, you can protect up to $35,000 in equity in your home. If you are married and filing for bankruptcy jointly, you can typically protect twice that, or $70,000. By way of example, if you own a home valued at $300,000, with a mortgage of $250,000 you can still file bankruptcy while keeping the home. This is great news to clients who want to stay in their home but eliminate medical bills, credit card debt and other types of debt which are discharged when you file a Chapter 7 bankruptcy.

In a Chapter 13 bankruptcy, you can typically keep your home even if your equity exceeds the $35,000/$70,000 exemption limits. Depending upon the equity that exists beyond the NC Homestead Exemption, your attorney can help you determine your monthly payment under a Chapter 13 bankruptcy, which would eliminate unsecured debt (credit cards, etc) while allowing you to keep the home.

If the options begin to sound complicated, that’s OK. Your Charlotte bankruptcy lawyer can easily walk you through them and help you decide the best option for you and your family. Call me today for a free phone consultation at 704.749.7747.

One misconception about bankruptcy is that you cannot go through a Chapter 7  bankruptcy or a Chapter 13 bankruptcy and keep your home. Generally, provided the home does not have significant equity, this is simply not true.

The filing of a Bankruptcy petition will put an immediate stay on foreclosure proceedings. This stay remains in effect until the secured mortgage holder is granted permission by the court to continue with the foreclosure, or until the Bankruptcy case is closed or dismissed. The stay on foreclosure created by the Bankruptcy can provide the necessary time the homeowner needs to sell the property or cure the default on the mortgage.

As an alternative to using the filing of a Bankruptcy petition to simply buy time, an individual can move forward with a Chapter 13 Bankruptcy plan that includes the home and accompanying mortgage(s), and allows the borrower to cure the default over the course of carrying out the Bankruptcy plan. In other words, the mortgage lender is treated similarly to other creditors in the plan, and once the final plan payments have been made and a discharge granted, the borrower is no longer facing foreclosure and remains in the home.

Second mortgages are given special treatment in Chapter 13 Bankruptcy. In circumstances where more money is owed on the first mortgage than the home is worth, the second mortgage can often be treated as an unsecured creditor. The effect of this treatment is that, like other unsecured creditors (credit card companies, etc), once the debtor completes the plan and receives a discharge, the second mortgage is extinguished. The homeowner remains in the home, continues paying on the first mortgage, and the second mortgage is “stripped off” of the property and discharged along with other unsecured debt.

There are two primary reasons I recommend a Will. First, if you have minor children, a Will provides direction as to the care of those children after your death. Second, with a Will a person has control over how and to whom his or her property shall be distributed after death.

Anyone can create their own valid Will. Most lawyers are hesitant to tell you this. The reason to consider having a lawyer assist with drafting your Will and other Estate Planning documents is that in order to carry out the wishes of an individual, certain legal language recognized by North Carolina courts is required. A lawyer familiar with the Estate Planning laws of North Carolina will help ensure the following items are handled consistent with your objectives:

The care of your children — A Will contains provisions naming Guardians who will care for your children in the event you (and your Spouse) should pass away.

The care of your assets — A Will directs the disposition of certain assets (Real and Personal Property) in the event you pass away. Your choices will probably differ from the state’s ‘default’ disposition of those assets should you pass without a Will.

Your healthcare decisions — An effective Estate Plan includes a Healthcare Power of Attorney, which names individual(s) of your choosing, who will be entitled to assist in making healthcare decisions for you in the event you cannot make those decisions on your own.

Your financial decisions — An effective Estate Plan includes a Financial Power of Attorney, which names individual(s) of your choosing, who will be entitled to assist in the handling of finances in your name, should you be alive but unable to handle those affairs on your own.