‘It absolutely blows my mind that this is the position that she’s in’: Facing bankruptcy due to medical debt, how can she protect her home and provide shelter for her four kids?

Mom of Four in Trouble

Hey Money Minder,

I’ve got this friend in North Carolina who really needs some help. She’s a 38-year-old single mom, a military widow, with four kids under 18. She’s been dealing with some serious health issues, like cEDS, and the medical bills are piling up like crazy. She used to be a nurse but had to stop working because of her health.

Her house is worth $290k, but she still owes $80k on the mortgage. She’s thinking about filing for Chapter 13 bankruptcy to deal with her medical and credit card debt. The problem is, she’s been told she might lose her home in the process because of the equity rules in North Carolina.

She’s explored options like transferring the property to a trust or selling it to her 16-year-old, but nothing seems feasible. The bankruptcy attorney she spoke to was pretty negative about her chances of keeping the house.

Do you have any ideas on how she can protect her home and still go through with the bankruptcy filing? It’s tough to see her in this situation with four kids to take care of.

Thanks for any help you can offer!

Take care,

Mom of Four in Trouble

Response from THE MONEY MINDER:

Hello There,

I’m truly sorry to hear about the challenging situation your friend is facing. It’s truly admirable that she is seeking solutions despite the difficulties she’s encountering. In regards to her house, it is indeed a tough situation given the equity limits in North Carolina bankruptcy filings. Based on the information provided, it seems like keeping the house within the bankruptcy process might be a considerable challenge.

While transferring property close to a bankruptcy filing isn’t advisable due to potential complications, one practical option to consider could be exploring refinancing the mortgage to pull some of the equity out. This could potentially help her access some funds to manage her debts without losing her home. Additionally, she could look into negotiating with the mortgage company to work out a feasible solution that allows her to retain the property.

Another option would be to consult with a different bankruptcy attorney or financial advisor to explore any potential loopholes or alternative solutions that could help protect her home. They may have insights or strategies that the initial attorney may not have considered.

In such complex financial situations, it’s crucial to seek professional advice tailored to the specific circumstances. I would recommend weighing all available options carefully and considering the long-term implications before making any decisions. I hope that your friend can find a solution that works best for her and her family’s well-being.

All the best,
THE MONEY MINDER