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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2822
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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equity home loan with an property value decreased by half can

This answer was rated:

equity home loan with an property value decreased by half can you declare bankruptcy chapterb7 in michigan

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

Are you trying to get rid of the equity line?

Terry L. :

Unfortunately chapter 7 won't help you. It's secured by the property

Terry L. :

You can file chapter 13 to treat it as an unsecured debt, and pay it possibly as low as 10%

Terry L. :

Depending on assets, and income when calculating the chapter 13 repayment plan.

Terry L. :

Unfortunately, there is no comparable provision under chapter 7 of the code.

Terry L. :

Did you have any questions?

Terry L. :

hi

Customer:

chapter 13 has provision to deal with negative equity property loans and credit cards debt.

Terry L. :

yes.

Terry L. :

If the 2nd mortgage is completely unsecured, it can be treated the same as a credit card

Terry L. :

and the lien comes off the house upon completion of the case.

Customer:

Equity loans are they considered to be 2nd mortages.

Terry L. :

yes

Terry L. :

you still have a first mortgage?

Terry L. :

and the balance on the first is more than the value of the home?

Customer:

NO THE HOUSE WAS PAID OFF,but we took out an equity loan in 2007. the property values decreased in Detroit Mi drastically.

Terry L. :

Oh I see

Terry L. :

Unfortunately, you won't be able to strip it off then

Terry L. :

if you don't want the home anymore, you can discharge the mortgage in chapter 7, but the lender could foreclose. In chapter 13 it needs to be a wholly unsecured loan to strip it off.

Terry L. :

So, you won't be able to get much relief thru the bankruptcy code. perhaps try negotiating a loan modification with the lender based on the current value.

Customer:

okay . THanks , but what good would a chapter 13 be or maybe a chapter 7 better in my life sitiuation.

Terry L. :

well, chapter 7 can wipe out all other consumer debt if you don't have any assets and minimal income

Terry L. :

if you have unexempt assets, and/or disposable income then the chapter 13 will be the way to go

Terry L. :

Talk to a local bankruptcy attorney to review the best options for your

Customer:

Great will do.

Terry L. and other Bankruptcy Law Specialists are ready to help you