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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I have a house and four rental houses and 1 rental apt with

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I have a house and four rental houses and 1 rental apt with 4 apts. I'm in serious financial trouble and in danger of loosing all. Is Chapter 13 bankruptcy a viable option? why? will I be able to keep the properties that have loans against them would a judge be able to reduce the amount owed or what or will I waste time and money? My income from firefighting job is 45k and from rentals is 39k before reducing to a more realistic 70% of 39k which = 27k. I'm paying approx. 26k in loan payments, taxes and insurance for those properties. I'm in arrears in taxes and payments and I'm trying to sell my vehicles to get even before filing.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 5 years ago.

WebLaw :

*Due to rules of your state bar or mine, nothing herein is intended as legal advice, only intended as general information to better help yourself.*

WebLaw :

Welcome to JustAnswer,

So sorry to hear of this dilemma. If my answer is not clear to you or does not fully answer your question, please ask me for clarification by using the reply button.

A chapter 13 bankruptcy may assist you if you have junior liens since a chapter 13 bankruptcy may be used to avoid the junior lien in a process known as lien stripping

Chapter 13 bankruptcy can strip off a junior mortgages if the first mortgage equals or exceeds the value of the property.

WebLaw :

Please use the REPLY button if you have any questions concerning my answer. Otherwise please click ACCEPT so that I am paid by the site for answering.

Best wishes for a Happy and Healthy New Year!

Customer: replied 5 years ago.
One house im loosing $100 approx. a month on, so I wouldn't mind loosing it, but there's no junior loans. One house I make approx. $100 month plus being able to deduct expenses but it's a loan of 37k on a 50k house and there's no junior loan and the interest rate is 11% which was a take it or leave loan already in the works during the market crash.
My house I owe more than it's worth and there is a junior loan. I owe 79k plus 8k junior and it's worth 50 to 60k given the market. I own one house beside me outright it needs a lot of work to be livable but within 3 months I could live in and fix it up, then after establishing 90 day occupancy and keeping mortgages current could I file 7 and elect to continue paying the mortgages I wanted to keep and keep my house I owned outright? I don't want to give up my current residence and can't figure out how without loosing the one beside me. If a judge can only remove junior loans in a Chapter 13 I can only see it working if I file, wait as long as I can to go to court while saving the money I would be paying in mortgages until a plan is set. And then what? Pay what in the next 3 -5 years? I don't see what debt I would get rid of. Do they get rid of unsecured debt in Chapt. 13?
Expert:  Ellen replied 5 years ago.
Unsecured Debt that is not able to be paid over a five-year period is discharged in the 13. However it does appear that a 7 would be better suited in your situation as you appear to have only one house with equity.

JustAnswer requires new questions to be posted on new question pages, but you can request me by starting your question with "FOR WEBLAW" and/or typing your question in my question box, which can be found here:
Customer: replied 5 years ago.
Relist: Incomplete answer.
the answer was two short sentences to a complicated question
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
1) What state are you in?
2) Have you lived in that state for at least 2 years?
3) What is the current market value of your home?
4) What is the balance on each mortgage for your home?
5) What are the current market valued for each rental property?
6) What are the corresponding balances for each mortgage for each rental property?
Customer: replied 5 years ago.
1. WV 2. yes 3. $65k 4. 78k and 8k second mortgage with same bank
5. worst property owe 58k/worth 35k rent is 100 per month less than expense
2nd worst owe 37k worth 50k rent is only 100 over expense if perfectly rented
3rd wrst is burnt with no debt & garage i use for storage down the street worth 15k as is
4th is land agreement apt building owe 71k only 15 years left worth 80k I cannot be late on payments or it will be taken away without notice I make over 800 per month if all four rented.
5th is house next to mine two story top story rented bottom story needs 3 months work. I owe nothing top apt pays 375 I probably pay 60 per month in taxes to own. I thought about living in this one for 3 months then filing Chapt. 7 and electing to pay for my current house even though I owe more than it's worth and keeping the apt building (#4) as paid and hopefully being able to keep my garage down the street.
Expert:  cfortunato replied 5 years ago.

What is the current market value of the house next to you?

Do you also have other debts that need to be discharged - such as credit card debt?

Customer: replied 5 years ago.
Current value only around 35k downstairs needs everything upstairs is the rental. But could become a duplex rental after the bankruptcy and move back into my current house or I could continue after bankruptcy to live in the bottom half and rent my current house until wife finished last four years of pharmacy school. The other debts such as credit cards I stopped paying when I started having real trouble about two years ago 11,300 in credit card debt and another 9 or 10k in business related debt
Expert:  cfortunato replied 5 years ago.

With a Chapter 13 filing and completion:
1) With your home, the balance of the second mortgage ($8K) can be stripped. If you move out of your home, and rent it instead, you can also have the unsecured portion (the $13K difference between the market value and the balance of the mortgage) of the first mortgage stripped.
2) With the worst rental property, the difference between the market value ($35K) and the balance of the mortgage ($58K) can be stripped, leaving a mortgage balance of $23K.
3) Since your unsecured debt amounts to $11,300, if you can pay that amount over a 5-year period ($188 per month), you will be able to keep the 4 other rental properties with equity.



I think this is what you wanted to know. If not, please let me know.

Thank you.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.
Thank you
Expert:  cfortunato replied 5 years ago.
You're welcome! And thank you for accepting my answer!