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Maverick
Maverick, Attorney
Category: Bankruptcy Law
Satisfied Customers: 6246
Experience:  20 years of professional experience
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I need to file for bankruptcy on my home, which has a HELOC

Customer Question

I need to file for bankruptcy on my home, which has a HELOC for 110,000 . my first has a 112,000 balance. the home is valued at 120,000. if I CAN MAKE THE HELOC GO AWAY, AND I CAN JUST MAKE ARRAINGMENT WITH THR FIRST MORTG. TO WORK OUT A PLAN TO MY PYMNTS ON FIRST ONLY ? THAT WOULD BE GOOD. IS IT POSSIBLE?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Maverick replied 7 years ago.

 

If you have a second mortgage on your house, and the value of the residence is less than the balance due on the first mortgage, you can strip off the second mortgage and treat it as an unsecured claim. However, you can only do a second mortgage strip off if there is not one single dollar of house value to "secure" it, and you stay in your Chapter 13 until its completion.

 

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Expert:  Maverick replied 7 years ago.

If you can see this just click reply. You have already paid the $15 so there should be no further charge.

Expert:  Maverick replied 7 years ago.
What the law about this is saying is that if the current fair market value of your house is less than the 112k balance on the 1st mortgage, then you can ask for the 2nd mortgage to be stripped if you file a chapter 13 BK and complete the chapter 13 payment plan.
Customer: replied 7 years ago.

I was thinking of chapter 7 bankruptcy. I want to continue to pay on my first mortg. and not include that in the bankruptcy, only include the second mortgage. Can I do that?

Expert:  Maverick replied 7 years ago.

The mortgage stiff off to my knowledge in only currently available under chapet 13 and even then only under the circumstances as stated above, There is a bill that broadened these powers that passed the House but it has not yet passed the Senate as of March 09.

 

Since the second mortgage is secured by the home, I doubt it could be eliminated in a chp 7 if it can barely be eliminated in a chp 13.