Ch13 and huge negative equity

[elster]

Trying to file Ch7 but UST is objecting. I am considering Ch13, but I have 72k in credit card debt, and 350k upside down on house. So this would be 422k unsecured debt, which is outside range of Ch13.

Is Ch11 the only possibility? I've read about a 307k limit on unsecured debt in a BK13.

When I filed I had negative income due to obligations. I already moved into a rental house months ago, and keep praying some way the Ch7 can work for me.

[Lajazz947]

This might sound dumb but I thought that the house was secured debt even with neg equity.

Why does it appear to be unsecured, because of the negative equity?

[rrockinggramma]

If you bought the house for over 400,000 now you are saying that it is worth only about 100,000? Even at foreclosure, I bet the negative equity is less. I would file the chapter 13 and let them file a claim for that amount and then object to it. It makes no sense to me that you paid 400,000 plus for a home that now is only worth 1/4 of that.

oh has the house already been sold at auction? Are you sure it is 350 K neg equity?

[laurannm]

Why is the UST objecting?

[elster]

UST objecting due to my salary being 150k/yr

House was 550k and rolled in debt, balance became 850k. House is now worth 500k per zillow.com.

The mortgage broker duped me and rolled in astronomical fees into the balance, it's a really messy situation. I have a list of 9 violations done by the broker in my case. I hope it can help in rebutting with the court.

I am trying for Ch7 rebuttal, then if that fails, Ch13. My attorney is saying if you give up the house in Ch13 the negative deficiency wouldn't convert to unsecured, so I can stay in BK13.

Luckily, my credit card debt is managable in a 5 year plan - I could pay it 100%, and be protected from my mortgage lender via the BK13.


But CH7 would be nicer if we can get through it.

[diviaruba]

Bub, you just need to give up that house. How does it help you get a fresh start when you're paying a mortgage with that much negative equity? Bite the bullet, get rid of it and stay renting. You'll save a bundle. Even if you don't get your Chapter 7, which I doubt you will - court won't want to see you throwing your money away on excessive housing expenses well above actual values - a 13 would clear your decks in 5 years.

Sounds harsh, but do you really think you'll see 70% appreciation on the house over the next 5 years? That's what it will take to just get you back to even, and a huge drain on your cash flow in the interim. Heck, it's mostly all interest. You'll live better than you're living now.

[HHM]

Bub, you just need to give up that house. How does it help you get a fresh start when you're paying a mortgage with that much negative equity? Bite the bullet, get rid of it and stay renting. You'll save a bundle. Even if you don't get your Chapter 7, which I doubt you will - court won't want to see you throwing your money away on excessive housing expenses well above actual values - a 13 would clear your decks in 5 years.

Sounds harsh, but do you really think you'll see 70% appreciation on the house over the next 5 years? That's what it will take to just get you back to even, and a huge drain on your cash flow in the interim. Heck, it's mostly all interest. You'll live better than you're living now.

I agree, if you really run the numbers, you are FAR BETTER off dumping this house, renting for a year or two and buying another home during this depressed real estate market than trying to dig out of negative equity. Home prices are not going to recover fast enough to eat up that negative equity.
Dump the house.

[elster]

It was never question of keeping the house - I walked away in April. I have been renting since then. I am just hoping to stay in Ch7 if I can. My attorney mentioned something about secured debts being a certain amount, and in his BK software I fit the profile for Ch7 but by a slim margin. We are rebutting the UST's object but if Ch13 is the only way, then so be it.

Hope I get lucky and Ch7 goes through.

[biotechsolution]

how far are you over the income mean? are you using
the expenses and mortgage payments from the house you
walked away from? are your rent payments above the IRS
set amounts?

[espo1357]

I agree, if you really run the numbers, you are FAR BETTER off dumping this house, renting for a year or two and buying another home during this depressed real estate market than trying to dig out of negative equity. Home prices are not going to recover fast enough to eat up that negative equity.
Dump the house.

See, when a sharp like HHM advises to dump, you have to say he is probably right.

And some of you wonder why people (me included) flip flop on the decision on whether or not to walk!

I think you have a great point, HHM, you can just buy again in a few years, because the market is not going to jump for at least another 5-10 years!

[HHM]

Although we normally frown on reviving old posts, this one is somewhat apt. Look at the original date, July 2008

The prediction was right. Here we are more than 2 years later, and house prices are the same, if not worse. I really hope the OP heeded the message and dumped their house. They would be in a position to buy another house next year.

[espo1357]

Although we normally frown on reviving old posts, this one is somewhat apt. Look at the original date, July 2008

The prediction was right. Here we are more than 2 years later, and house prices are the same, if not worse. I really hope the OP heeded the message and dumped their house. They would be in a position to buy another house next year.

My BK 13 is most likely going to go to a 7 by the end of next year, and I was wondering:

how long does it take to get a decent credit score after this mess? I am current on everything after the 13 last year, and I haven't bothered to check my credit score. I just don't see how the banks can afford to NOT lend to someone willing to put down 20 pecent to buy and has a decent job.

My plan is to take a loan from my 401k AFTER the discharge of the 7, and then use that as a downpayment on another property.

As for the other post, geez, I didn't even notice the date. In my location (west coast), things are as bad as they can be. Unemployment is down. People are broke. So, I don't see how housing is going to move that quickly.

The only drawback is plopping down 20 percent to buy another property.

Thanks for the feedback HHM.



sorry about the reviving of the old post.