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Were the first mortgage and the equity line both included in the bankruptcy case along with any other debts?
If not, why not?
Was the equity line used to purchase the property initially?
Have the payments he has been making been based on the total amount of his debts including the equity loan?
Ok , a CH 13 is a bankruptcy where the judge and the trustee come up with a repayment plan where they reduce or eliminate some debts and then set up a plan over normally 3 or 5 years to pay off those reduced debts. So it wouldn't matter what the person estimated the value of the house to be... The BK repayment plan is based on the actual debts of the BK estate, not the estimated ones. And the BK trustee would sell the house, if it was sold, at public auction to the highest bidder.
So the bot***** *****ne is that friend's estimated value of the property wouldn't have anything to do with the ending payment plan..
isnt it that on a 13, if the combined loan is more than the value of the property, the equity line loan w can be forgiven just like credit cards.
That is essentially what happens.. If you owed $350K on a house that is worth $250, the trustee and the BK judge reduce that amount down to something that fits within your income and payment abilities. But it is normally only in a CH 7 BK that debts are entirely forgiven, they are normally just reduced in a CH 13 and then paid off over 3 or 5 years.
The credit card was likely forgiven because the creditor didn't think that was enough to bother with and getting a minimal payment per month for 5 years and would rather just write it off on their taxes as a loss immediately.
Then only the arrearages were included in the BK, not the mortgage and equity line. You would have had to actually include those amounts in order for them to be negotiated and reduced.
But at this point, almost 5 years down the road after agreeing to the repayment plan, you are pretty much stuck now. The time to negotiate would have been 5 years ago prior to agreeing to the repayment plan.
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