BK and refinance

[emaretta]

Hi!
I have my initial consult with a bk lawyer on 9/26 but curious before then about this...

I own 2 homes; my primary and a rental.
I'm upside down in my primary with a 1st mtg at 8.1% that I've been deferring interest on, and a heloc. The rental has just a little equity but not really worth the trouble to sell it, plus homes are sitting on the market for months in my area (I haven't seen one sold yet in the past year).
I had originally planned to flip it and so I told my mtg broker to get me into whatever plan she could so we could buy it. That left me with a 9.125% rate on an investment property and my rate goes adjustable in May 2008. If we file BK this year, will I be able to refi either of my homes for a lower rate? Especially before the rental goes adjustable? And if I'm unable to refi, what happens when my mtg on the rental goes up?

thanks!

[Boscoe]

If you include either or both in the bk, you won't need to worry about any adj. rates, as your debt will be discharged in the bk and you will walk away free and clear.

The rental you should walk from. The primary should also be considered, but of course you need somewhere to live.

[emaretta]

If my understading is correct with Ch 7 and 13, we won't quality for a 7, so under a 13 we'd still keep both properties so the mortgages would stay the same wouldn't they?
Sorry if I sound completely ignorant, I'm one of those who though bk was an awful "b" word, so this is all very new to me. I only considered it just a couple weeks ago.

[lrprn]

If my understading is correct with Ch 7 and 13, we won't quality for a 7, so under a 13 we'd still keep both properties so the mortgages would stay the same wouldn't they?

The problem is how much homestead equity your state allows you to keep, even in Ch 13. In most states, the homestead exemption only applies to your primary residence, not rental property. What state are you in, emaretta?

Sorry if I sound completely ignorant, I'm one of those who though bk was an awful "b" word, so this is all very new to me. I only considered it just a couple weeks ago.

Many of us here started just where you are right now. You are doing the right thing by finding out what you need to know about bankruptcy. Please don't apologize for asking to learn about something that is so important to your family's financial future and well-being. Ask questions, search the forums for information, and check out the stickies - lots you can learn here!

[emaretta]

thanks boscoe and lrpn.
I'm in florida and the homestead here is $25K.

[supastar84]

Hey do you owe more on your house or rental property? The reason I am asking is that if your debt is primarily (meaning greater than 50%) business debt (as would be the rental property), then you can bypass the means test and qualify for a chapter 7.

[emaretta]

I owe about $49K more on my primary than on the rental.

Rental $88K mtg (10K down used from the primary house re-fi)
Primary 1st mtg $115K, Heloc $22,500