115% 2nd considered unsecured debt?

[lilhelp]

I have a second on my home for $55k or so. $25k-$30k of that is over and above the fair market value of the home. Would this be considered unsecured debt? Can I have all or some included in a BK(7 or 13) and still keep my home?

[HHM]

Because the loan is on your primary residence, you generally cannot discharge the unsecured portion and still keep making payments on the secured portion to keep the house. If you do a 7, you would have to reaffirm the debt, if you do a 13, you would have to elect to pay them directly. There are some other ins and outs, and technical issues with regard to what you suggesting, you should seek the advice of a local attorney to address your specific circumstances.

[lilhelp]

Because the loan is on your primary residence, you generally cannot discharge the unsecured portion and still keep making payments on the secured portion to keep the house. If you do a 7, you would have to reaffirm the debt, if you do a 13, you would have to elect to pay them directly.

Thanks, but what do you mean by "reaffirm the debt"? I assume this simply means promise to pay as scheduled, no?

[HHM]

"what do you mean by "reaffirm the debt"? I assume this simply means promise to pay as scheduled"

Basically, Yes

[lilhelp]

Sounds like I'de be pretty stupid to do that since it's upside down. How would this work then? What would happen if I did a ch13 and included the house then? If the test is applied, they would get only what a ch7 would net them which is $20k or so on the $55k note right? Would the balance of that get wiped clean or considered unsecured debt in my plan? With upside down cars the lender only gets sale value right? So is it the same with homes?

[HHM]

No because its a loan on your primary residence. You are not allowed to modify the terms of the loan that is secured by your residence. 11 U.S.C. Section 1322 (b)(2) in a chapter 13.

If your goal is to keep the house, the long and short of it is, you have to provide payment for the second mortgage. If you surrender the house, then yes, the undersecured portion of the second mortgage becomes an unsecured debt and gets discharged with all your other unsecured debt.

[lilhelp]

So I cannot include a residence in a ch13 period?

[HHM]

So I cannot include a residence in a ch13 period?

You can, if you can pay off the lender at 100% of the principle of the note plus interest during the course of the plan. But most people cannot afford that.

[lilhelp]

You can, if you can pay off the lender at 100% of the principle of the note plus interest during the course of the plan. But most people cannot afford that.

Ok, that makes sense I guess. It sounds like I have a ch7 looming in the future

Man this really stinks. I'm at a loss right now.

[kari]

I'm still confused with some of the verbage. I have a home worth $216k, a $170k mtge and a $25k home equity line of credit, leaving about $21k equity. In my state, the exemption is $15k. If I file ch 7, what is going to happen? Will I be able to keep it and just keep paying on each as I do now? Up to date on payments. Would they really try to acquire my house when I have $22k in medical and almost $30k in cc?

[kari]

Can either of you please explain this to me. Also, if I just stopped paying on my cc's, would it be a good idea to change checking acct. and should I see a lawyer now even though I don't intend to file until July?

Thanks for any help.
Kari

[HHM]

You need to speak to your attorney regarding the questions you asked. Each state works a little differently when it comes to exemptions, as does each trustee. For example, in your area, even though you have $6000 in unexempt equity, the Trustee may not care so he may not try to sell, but only a local attorney can tell you what would happen.

[worriedbk7]

Do you have to pay off 100% of your mortgage during a 13 if you do not wish to keep your residence? Refer to the 3:08 posting in this thread. I don't want my house and my car, but I am afraid that I will be pushed into a 13. How does that work?