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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31729
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Not looking to do a backruptcy unless pushed to the limit

Customer Question

Not looking to do a backrupty unless pushed to the limit but really need money to pay off credit cards. I've paid into a mortgage for 13 years. Can you advise about borrowing from this? Do I have any rights or can you say anything about what to expect?

Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 4 years ago.

Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.


You can refinance your house and cash out the equity in your home and use it however you wish.


Basically, you need to have the home appraised to set the value. Most lenders will loan up to 80% of the home's value. Thus, you would be able to borrow the difference between what you owe and the 80% value of the house. You can take that money and use it to pay your credit cards, etc.


For example, say your property appraises for $100,000, and you owe $40,000 on it. The lender will likely lend you 80% of the appraised value, which is $80,000. If you still owe $40,000, the lender would be able to lend you $40,000, which is the equity in your home.

Customer: replied 4 years ago.

I don't know that I have enought equity and I'm going to have a better idea of what I'm up against in a few days or sooner maybe. Can I leave this open so I can continue with you?

Expert:  Roger replied 4 years ago.

Yes, the question will remain open for a long period of time. Even after the conversation is rated, you can come back to it and make additional posts.

I'll be glad to pick this up whenever you get ready.

Customer: replied 4 years ago.

Here's some additional information that will explain where this is stalled.

Actually, I think I had about a $180,000 mortgage and still owe $160,000. The bank told me that they could probably only offer to refinance and lower my monthly payment at lower interest rates to give me more money to pay the credit cards. But they are waiting on me to give me a better value for the house. They told me new laws prevent them from pulling from the multiple real estate listings. At least that's what this one bank mortgage sales person said to me.

Expert:  Roger replied 4 years ago.

If you don't have very much equity in your house, and with the 80% rule, it's not likely that you could get much cash out of a refinance. But if your current interest rate is 6-7% and you can get a mortgage for 3-4%, it will make a very significant difference on your monthly payment.

You would have to have your property appraised to set the value - - you can't use real estate listings.

Customer: replied 4 years ago.

I was going to viist a real estate office now to see if they would give me the value. Another person here told me this "Really, the only solution you have is to either borrow the money to pay them off or file bankruptcy. While a bankruptcy is devastating to your credit, so is missing payments every month"

Customer: replied 4 years ago.

I will check in with you later tonight or whenever you are back online since I'm going to go out and see what I can get from my bank too.

Expert:  Roger replied 4 years ago.

You'll need a real estate appraisal as that reflects what homes have sold for - - not what sellers are asking. Also, a realtor cannot appraise your home (unless he/she is a licensed appraiser as well).

If you were to file Chapter 7, you could reaffirm the debts you want to keep - your house, car, etc., and you could discharge the debts you don't want - like the credit cards.

Bankruptcy is definitely harmful to your credit, but if you need relief and a fresh start, then bankruptcy gives you the ability to dig out of the hole without being hammered by creditors every time you turn around.

Customer: replied 4 years ago.

Not being hammered now, this was a very useful reply. I'm currently just able to stay afloat. My wife and I have decided to get serious about a budget and see where we really are at. But I'm wondering how does one really "know" when a extreme measure such as bankruptcy should be taken? I mean can anyone help you figure that out?

Expert:  Roger replied 4 years ago.
This is a tough decision, and it is certainly to be the last resort. The only test that applies is the means test, which tells you whether you're eligible or not. However, many people that qualify don't file and try to work things out without bankruptcy.

The only thing you really can do is make a personal assessment of your financial situation and decide whether it is worth trying to pay your way through this or to file bankruptcy and get a discharge and a new start.
Customer: replied 4 years ago.

So who does a "means" test, and how much does it cost to do that and then to file? If money is the problem then paying lawyers exorbitant sums to get you out seems out of reach.

Expert:  Roger replied 4 years ago.
You can actually take a means test online for free to see if you qualify to file. Here's a link:

Here's the official means test form:

Expert:  Roger replied 4 years ago.

Please let me know if you have any additional questions related to this issue. Also, please positively rate our conversation so that I may receive credit for my research and response.