Chapter 13 Question

[cologuy77]

My wife and I were both Discharged from a Chapter 7 BK in December of 2003 (Almost 5 years a go). Soon after, we got one of those junk ARM home mortgages and have been hurting from it for some time.

We are now financially at a breaking point. We own two homes. Our original home we now rent out, but the income we receive from that does not cover our mortgage and HELOC on that property.

We were wondering if we file a Chapter 13, can we include the orginal home and it's HELOC in the payment plan? We basically just want to let it go back to the bank, but not get hit with a deficiency judgement once it is auctioned. Can they force us to give up our current home which we live in? It is at 100% financing, so there is no equity in it.

Thanks!

[BKParalegal]

Yes, you can surrender the rental property and it any deficiency will be discharged in the BK. And in regards to your primary residence, why would anyone want to force you to give up a home that has no equity? It is protected in bk, so it is fine.

Here is a thought though. Depending on your first home's value, if the value is less than the first mortgage, then here is an idea. Move back in to your first home and make it your primary residence. You can then do a strip off of the second mortgage. Now with your current home, if it is doable, see if you can rent it out at a break even or better. If not you can let the first one go. The point is, analyze both homes for which one works best for you in the future and make that your primary.

Good Luck