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Keeping your home when filing for bankruptcy

On Behalf of | Dec 18, 2023 | Bankruptcy |

The U.S. Bankruptcy Court Middle District of North Carolina reported in September 2023 a total of one filing for Wayne County. The state had 147 cases, with Chapter 13 being the most common.

Filing for bankruptcy can be a challenging and overwhelming process, and one of the primary concerns for individuals facing financial difficulties is often the prospect of losing their home. In North Carolina, the law does allow options that could make it possible to keep a home after filing.


North Carolina offers a homestead exemption of $35,000 that allows individuals filing for bankruptcy to protect equity in their primary residence. This exemption only applies to the home in which the filer lives. It increases to $60,000 for a filer over the age of 65 who does not have a spouse.

Understanding the equity in a home is important to understand the exemption. Equity is the difference between the market value of the home and the outstanding mortgage balance. If a home’s equity falls within the allowed exemption limit, the filer may be able to keep it throughout the bankruptcy process.

Type of bankruptcy

The type of bankruptcy a person files can impact the fate of the home. Chapter 7 bankruptcy involves the sale of non-exempt assets to pay off creditors. If the home does not have full protection under exemptions, then it could be at risk of seizure to pay the debts.

However, Chapter 13 bankruptcy involves creating a repayment plan over three to five years to address outstanding debts. In this scenario, the filer may have the opportunity to catch up on missed mortgage payments while keeping the home.

Despite filing for bankruptcy, a homeowner must also maintain regular mortgage payments. Using the laws and staying up with payments will play a large role in whether a filer can keep his or her home during and after the bankruptcy process.