Too much equity in my home for 13?

[Middleteach]

I am new to the forum and am getting ready to see a lawyer regarding my need to file for bankrupcy. From what I've been reading on the web Chapter 13 looked like my best and possibly only option. I have a home in California with about 200-250K in equity. I have about 150k in dept mostly in unsecured cc debt and I am a teacher making about 52,000 per year. My take home is 3200 per month but 2000 goes to my 1st home mortgage. This only leaves 1200 for everything else which has been going towards food, gas, insurance and utilities. I can only probably scrape together 100-150 per month for creditors. I am really stressed because of the web information I have been reading regarding debtors with a large amount of equity in their homes and low income relative to their unsecured debt, and thus being turned down for chapter 13. Can anyone provide some light on this situation and what options may be available? Thank you

[Flamingo]

I am new to the forum and am getting ready to see a lawyer regarding my need to file for bankrupcy. From what I've been reading on the web Chapter 13 looked like my best and possibly only option. I have a home in California with about 200-250K in equity. I have about 150k in dept mostly in unsecured cc debt and I am a teacher making about 52,000 per year. My take home is 3200 per month but 2000 goes to my 1st home mortgage. This only leaves 1200 for everything else which has been going towards food, gas, insurance and utilities. I can only probably scrape together 100-150 per month for creditors. I am really stressed because of the web information I have been reading regarding debtors with a large amount of equity in their homes and low income relative to their unsecured debt, and thus being turned down for chapter 13. Can anyone provide some light on this situation and what options may be available? Thank you

To file bankruptcy, you must be insolvent. If your assets exceed your debts, you are not insolvent. Go speak with an attorney and take with you a complete listing of all your monthly payments, debts, sources of income, paystubs, asset listing and your most recent state and federal tax returns. You will find out exactly where you stand as to what you can or cannot do. Best of luck toyou.

[SiftedLikeWheat]

Also: be absolutely sure about the amount of equity in your home. Have you had an appraisal or market evaluation done? Depending on where you are in CA, your home may have lost a lot more value than you think. My home out there has lost anywhere from 30 to 60% of its value, depending on who does the valuation. And, as I always ask my attorney, what's something worth that no one will buy? If you are in a bad market and can't sell, you can't pay off your creditors. Unfortunatley it doesn't work that way on paper. However, what does still work are market valuations to your favor--whatever the reason.

[Middleteach]

Wow...it sounds like Chapter 13 and staying in my home may not be an option for me. I will check with a lawyer but that sounds like terrible news. I tried for a home equity loan to pay off what I owe but no one will loan me any more money even with the equity in the home.

[Mary Irene]

My friend filed for bankuptcy and had a lot of equity in his home. The court ordered him to sell his home in order to pay the debt, so be careful. He had to borrow money from someone in order to avoid having to do that. Talk to the lawyer.

[Mary Irene]

Based on my own experience, your home sounds too expensive for you. I would reccomend you do sell it on your own and buy a cheaper place or rent for while. Don't wait until you lose it.

[Flamingo]

Wow...it sounds like Chapter 13 and staying in my home may not be an option for me. I will check with a lawyer but that sounds like terrible news. I tried for a home equity loan to pay off what I owe but no one will loan me any more money even with the equity in the home.

As many people find out, bankruptcy is not always the easy out it appears to be. Many people with high debt and high equity run into this - they try to take out a home equity loan to pay off the debt and due to the high debt to income ratio or just plain bad credit, do not get the loan. These folks are not insolvent (i.e., higher assets than debt) but are stuck. My initial suggestion of consulting with a BK lawyer still stands - I would do that and investigate any other options that may be available to you if you want to keep the home.