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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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My wife and I filed for Chapter 13 in Michigan in March of

Customer Question

My wife and I filed for Chapter 13 in Michigan in March of this year. We each commute over 1 hour each way to our respective places of employment. With the housing market in the condition that it is in, we find ourselves owing over six figures more on our house than it is worth. We would really prefer to be able to move closer to work to reduce our commutes and to be able to spend more time with our 2 year old daughter. Our second mortgage is being stripped through the Chapter 13 filing. My question is this, what effect would walking away from our house and foreclosing have on our filling and the stripping of the lien? We would plan on renting a house for a few years, and also understand we would have to rework our budget with our Trustee.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 7 years ago.
Hi JACustomer,
Is there any other secured property - besides the house - that you are trying to keep with the Chapter 13 Bankruptcy?
Customer: replied 7 years ago.
Yes, two vehicles.
Expert:  cfortunato replied 7 years ago.
If you allow your house to foreclose, the main effect on your Chapter 13 will be an increase in your monthly Chapter 13 payment if your rent is less. The first and second mortgages will be discharged.
However, if you decide you no longer want to keep the house, you may be better off converting to a Chapter 7.

Edited by Christina Fortunato, Esq. on 8/2/2010 at 8:35 PM EST
Customer: replied 7 years ago.
I thought under the new bankruptcy rules that you could not choose a chapter 7 if you passed the means test. I would have prefered CH7 over 13, but was not eligble.
Expert:  cfortunato replied 7 years ago.
You are correct. I didn't know you didn't pass the Means Test. Of course, if you did not pass the Means Test, converting to a Chapter 7 is not possible.


Edited by Christina Fortunato, Esq. on 8/2/2010 at 8:51 PM EST