Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Does she want to keep the home?
Does she have income? If so, how much per month?
What is the amount of the mortgage and equity line payments combined per month?
Because she has equity in the home and because of her income level, it sounds like she needs to file for chapter 13 bankruptcy protection. This will allow her develop and submit a 3 to 5 year payment plan by which she can pay / catch up on secured debts like the home. The primary benefit would be that unsecured debts may get reduced to cents on the dollar (like the credit cards) so that she have breathing room.
If she cannot afford a lawyer, she may want to try a BK filing service like the one at the link below and do the BK on her own.
There may be others out there that you can compare this one to.
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She can try for a chapter 7 but after the 2005 changes in BK laws, you have to submit to a "Means Test" to see if you can qualify for a chapter 7. You can probably find that test on the link I showed you earlier. Since the means test is dependant on the locality in which you reside and your income level, there is a chance she may not qualify for the chapter 7.
If she sell the home and get her equity back, then she may not qualify for the BK as she would then have enough money to pay for her debts as they become due.
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