Guidance Question

[tadbitconfused]

We are finally going to file 1st of October. We owe 30,000.00 in CC debt, house with 1st and 2nd in foreclosure(not keeping) one vehicle repossed. When reading I notice it says paying all "non secured" debts... I understand that means credit cards. What I don't understand is does that mean the second on the house the balance of the truck or just the credit cards?

[JollyGG]

Pay anything you want to keep and your utilities. Don't pay any debt that will be discharged in the bankruptcy.

[tadbitconfused]

ok. I understand but when figuring the payment on a chapter 13 do they consider the second on the house as non-secured (owe more than the house is worth) and the left over balance of the truck as non secured?

[JollyGG]

The car will be sold and the diffence between your loan amount and what the car sold for will be considered unsecured debt. The house will be sold and depending on state laws the amount of your first mortage minus what the house sold for would be considered unsecured. If the house sells for less that the first or for only enough to cover the first then the second loan would become unsecrued. If the house sells for more that the loan on the first then whatever is left goes to the second and the difference between the loan amount and the amount they got from the sale of the house becomes unsecured.

So the short answer to your qestion is Yes.

[lrprn]

ok. I understand but when figuring the payment on a chapter 13 do they consider the second on the house as non-secured (owe more than the house is worth) and the left over balance of the truck as non secured?

When calculating the Means Test, since both loans are secured to the assets themselves, these loans are treated as secured loans. It doesn't matter than the assets are worth less than their loan values. Welcome to the new world of finance! Makes no sense, right? But that's how it is.

As JGG said, you keep paying for what you intend to keep and stop paying for what you are giving up. If you are filing Ch 13 and behind on payments, your lawyer can set things up so the arrears are made up in your Ch 13 plan.