2 replies to this topic

[chuckafuss]

I live in North Carolina and filed Chapter 7 in November 2011, and received debt discharge earlier this month.  As part of the filing, I agreed to voluntarily surrender my house to the mortgage companies (1st and 2nd mortgages) because I knew I needed to move from my town to find a job after almost a year of unemployment and a local unemployment rate of 13%.

I have now received pre-foreclosure letters from both mortgage companies.  I have an IRA composed of money from a defined benefit plan that my previous employer distributed to its employees when it went out of business.  The IRA was exempt assets in the bankruptcy.

My question is, when the mortgage companies foreclose, can they lay claim to any of the IRA funds, and can any other creditors (large hospital bills incurred after bankruptcy filing) access the IRA funds?  I am still unemployed and even with the previous credit card and other debts discharged, I still can't pay new medical bills.  I do draw unemployment.

Thanks for your help.

 

[FindLaw_AHK]

In North Carolina, standard IRAs are exempt from creditors' claims, under state law and federal bankruptcy law. I would highly suggest you consult with a local North Carolina Bankruptcy Lawyer for clarification on your specific issue.

[Tax_Counsel]

If you did not reaffirm the mortgages in the bankruptcy and the mortgage lenders did not seek any other exception to the discharge order, your personal liability on the mortgages was discharged in the bankruptcy. Their lien survives the bankruptcy, which allows the lenders to foreclose, but that's the extent of what they can do. They cannot sue you to get a judgment for the loan amount left after the property sells (known as the deficiency amount). Thus, if the mortgages were discharged, the lenders won't be able to attach anything else that you have now or in the future to pay the deficiency. Once they sell the property, they are done.

Even if they could get a judgement, in general IRA accounts and most other retirement accounts are exempt from attachment under the laws of most states, including North Carolina. Specifically, North Carolina statute section 1C-1601(a)(9) exempts:

Individual retirement plans as defined in the
Internal Revenue Code and any plan treated in the same manner as an individual
retirement plan under the Internal Revenue Code, including individual
retirement accounts and Roth retirement accounts as described in section 408(a)
and section 408A of the Internal Revenue Code, individual retirement annuities
as described in section 408( of the Internal Revenue Code, and accounts
established as part of a trust described in section 408© of the Internal
Revenue Code.

(underlining added.) As the underlined portion indicates, IRAs are exempt property in North Carolina.