North Carolinians who file bankruptcy just got a huge help from their state legislators
Our sister-state of North Carolina just raised the limit for the amount of exempt equity one can carry through bankruptcy.
The old limit was $18,500. On December 1, 2009 the limit increases to $35,000 ($70,000 for married codebtors).
This means that a person who qualifies to use North Carolina exemptions can save DOUBLE the amount equity in their property “safe” from the Trustee and creditors.
Why should Georgians care?
Well because our current state exemption for homestead is a paltry $10,000 ($20,000 if married codebtors).
If you own a house free and clear, and you file as an individual, you can only protect $10,000 worth of equity in the property. The Trustee has the right to demand compensation for the value of the non-exempt equity. That’s awful because it impairs debtors ability to keep a house they can otherwise pay for.
Things are not much rosier if you don’t own the house free and clear. If your house is encumbered by mortgage(s), you can calculate how much is at stake by subtracting the balance of the mortgage from the value of the property. Granted, property values are down–and it’s estimated that 20% of Americans actually owe more on their property than it’s worth. The fact remains that if there is equity, there better not be much, because our state legistlators have given us the most limited ability to protect our homes.
Most people who file bankruptcy are doing it because they are trying to keep their homes. See this article from the AJC published on August 4, 2009 written by Péralte C. Paul. Seems like there may be a disconnect between the reality of life and our current exemption scheme.
If you’re thinking about filing bankruptcy talk to your attorney about the value of your property. Don’t rely on a cursory estimate of what your property is worth. Make sure you’re not sailing for disaster.