debt limits / "unsecured" heloc?

[cadwell]

I have a first in the amount of $615,000 and a second / Heloc in the amount of $360,000. The house is currently listed at $599,000 with no activity. I would like to keep my house if at all possible and do a lien strip on the second. Is it possible to do a chapter 13 when the second Heloc is basically "unsecured" at the amount of $360,000? If this is considered unsecured, I think I would not qualifyy for 13 because of the unsecured debt limitations. I have about $30,000 in credit card debt and no other usecured debt.
Thanks!

[lrprn]

Is it possible to do a chapter 13 when the second Heloc is basically "unsecured" at the amount of $360,000? If this is considered unsecured, I think I would not qualifyy for 13 because of the unsecured debt limitations. I have about $30,000 in credit card debt and no other usecured debt.

According to the US Courts, "Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $336,900 ." (from http://www.uscourts.gov/bankruptcyco...ml#eligibility )

Since your unsecured HELOC is $360,000, it does appear that you are over the unsecured limit to file Ch 13. However, you should still check this with several experienced bk lawyers in your area to be certain that you can't file a 13.

It sounds like you really want to keep your home, so please forgive me for asking you a hard question. If it ends up that you can't file a 13, when you remove emotion from your situation and ask yourself in a cold, hard, logical business way if it makes sense to sacrifice everything just to keep a house that you owe more than $400,000 over what it's actually worth, does it really make sense to keep it? Or does it make more sense in the long run to allow the house to foreclose, find a rental for a few years, and start over fresh?

[CH33 Paralegal]

lien stripping is a treacherous path fraut with peril.

Anyway, depending on how much you owe on your other secured debt, you may not even qualify for a 13 no matter what.

lrprn has the numbers for you. do the math...it might be either a 7 or 11....7 only if you're giving the house up.

[justbroke]

Since your unsecured HELOC is $360,000, it does appear that you are over the unsecured limit to file Ch 13. However, you should still check this with several experienced bk lawyers in your area to be certain that you can't file a 13.

I respect lrprn's sage advice and CH33 Paralegal's as well. CH33 Paralegal is referring to what HHM had related in the past regarding the problems if you don't complete your Chapter 13 (receive a discharge). But, that's another thread...

However, this is not true in all Districts. Just because you want to strip a HELOC doesn't magically make it unsecured debt. This has to go through a hearing and perhaps an adversary proceeding (AP) if your District doesn't allow lien avoidance and/or secured status determinations by motion.

When you list the HELOC in your schedules, it will be listed as Secure Debt. It will be marked as "contingent" (because you want to strip it). In your Plan, you'll note it as "Lien Strip" and submit a payment of $0.00. Your lawyer then completes a Motion to Determine Secured Status and Avoid Lien (as a straight contested matter or under the more formal AP process).

Most districts go by what you put on your Schedules to determine whether you are over what they call the 109(e) limits. I would talk to your lawyer.

I went through this myself personally. If I added my HELOC/2ND to my unsecured debt on my schedules... I would have been over the unsecured debt limit on paper. (I am technically, but not on paper).

Work with your Chapter 13 attorney.

[duumy]

What happened here? were you able to lien strip being over the $360k unsecured amount or no?