Equity in Property

What is equity, and why is it important?
 
By Susanne Robicsek
North Carolina Bankruptcy Attorney
1701 Scott Avenue
Charlotte NC 28203
(704) 377-0777

NC Bankruptcy Lawyer in Charlotte North Carolina for Chapter 7 / Chapter 13

Equity in property is the value between what is owed to the lender and what your property can be sold for.  While legally you own the entire property, your contract with the lender gives it an interest in the property and the lender has the right to be paid before you do. 
 
For most people, we are talking about equity in houses and cars when we look at this issue.  The reason that equity is important is that it is a cushion that protects you.  If you have equity, you have the ability to lower the price on your property and sell it.  Without equity, if you can't sell the property and pay off the loan in full, your options are much more difficult. 
 
You will have to keep up payments on the loan until you can sell the property.  If you can't do that, you either have to get the cooperation and agreement of the lender to release the lien for less than the full payoff (with mortgages, this is called a "short sale")  or you may have to walk away and the property will be sold. 
 
Under N.C. law, if you can't pay, the property can be sold - the house/land will be foreclosed upon, and a car can be repossessed and sold at public auction usually for substantially less than the amount owed. 
 
Be aware that if the loans on the property are not paid in full, there may be a deficiancy balance owed by the borrower.
 
If the sale by the lender does not bring enough to pay the loans off in full, you might still owe the balance.  There may be tax consequences for not paying the loan, you might be sued for the balance, non-payment will affect your credit rating, and/or you might be sent to collections. 
 
To be sure of what will happen, you need to speak to an attorney who will discuss all of your options and make sure you are aware of your legal consequences.

The Law Office of Susanne M. Robicsek
1701 Scott Avenue Charlotte North Carolina 28203
phone:704 / 377-0776
fax: 704 / 377-0775

DISCLAIMER: This message is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion; Personal opinions may also be expressed. No attorney-client relationship is created by this message; Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.
 
The Law Office of Susanne M. Robicsek is
a Federally Designated Debt Relief Agency
under the Bankruptcy Code.
I file bankruptcy cases for people in financial need,
and have been doing so since 1989.

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Copyright 2008 Susanne Robicsek. All rights reserved.

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