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Category: Bankruptcy Law
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Experience:  20 years of professional experience
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I live in California. I bought a investment property in Florida

Resolved Question:

I live in California. I bought a investment property in Florida 5 years ago. Since this March, I have not paid the mortgage to my lender. Last week, the lender said they are going to start the foreclosuing process and asked for the full amount about $110,000. I don't want to keep this property but I am thinking to file the bankruptcy to avoid the loan amount (before foreclosure) or furture deficiency balance (after foreclosure).

Before a foreclosure is completed, is $110,000 a secured dabt? After a foreclosure, does $110,000 becomre a unsecured dabt? Based on my understanding, the means test does not apply when my debt is not primarily consumer debt. First of all, does my $110,000 belong to secured debt, unsecured debt or comsumer debt? 2nd could I avoid the means testing if I have a secured debt (before foreclosure) and unsecured debt (after foreclosure)?

My friend told me my $110,000 is primarily consumer debt because this property is a investment property. It's confusing me.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Maverick replied 6 years ago.

The loan is secured irrespective of whether it is before foreclosure or after. The loan is considered secured up to the fair market value of the home.


What is unsecured debt is the amount of the debt that exceeds the fair market value of the home. So after the foreclosure the deficiency amount is the unsecured portion.


If it is an investment property it is not consumer debt.



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