Has anyone successfully bifurcated 1st lien on rental property?

[Angelcity]

My parents were much more financially responsible than I was. And they're in the position to re-finance my mortgage to let me stay in the house. Obviously they can't make a short sale offer to the lender since it would be an arm's length transaction.

Right now I'm an unemployed single mom borrowing money from my folks to keep my house, so I'm sure the 800k unsecured is something I don't think I'll wind up having to pay back at full face value. And I don't want to walk away from the house because it's where I want to raise my little boy and because I believe that someday the property market will come back.

I don't show much in the way of disposable income or other assets, but the fact that my parents are willing to bail me out of my stupid mess might make Chapter 11 a viable option.

Short of Chapter 11 or walking away-- do you think I have any chance of a settlement offer or a short sale to my parents? Or anything else I'm missing?

[Angelcity]

I've read In re Bradford-- which sounds like it could be really helpful. But what about 11 USC 1123 where it says that you can modify claims OTHER than "a claim secured only by a security interest in real property that is the debtor's principal residence?" Does this statute give mortgage lenders the same protection in Chapter 11 that they get in Chapter 13?

Sooooooo confused.

[justbroke]

Don't be confused. I didn't know that same language from 11 USC 1322 was in 11 USC 1123. I think it's a non-starter anyhow, but it seems that 1123 has the same restrictions as 1322, with respect to the principle residence.

[DecentHuman]

Yes, Chapter 11 lets you touch the forbidden holy grail of bifurcation... your primary residence. This is because the part of the Bankruptcy Code that prohibits bifurcation of the debt is in 11 USC 1322(b)(2). Notice the "13" in "1322". That means it's part of the Chapter 13 code. It is not "incorporated" in any way into the Chapter 11 code. Therefore, only Chapter 13 prohibits that bifurcation of a loan on a primary residence.

I was talking to my attorney about this today and she said in a ch 11 you can not do anything to the mortgage on the primary residence and sent me this link. Look at section b5. (http://www.law.cornell.edu/uscode/11...3----000-.html)

[DecentHuman]

Oh

Sorry, didn't see page 2 of this thread where I guess everyone already figured that out!

[Angelcity]

No worries. Thanks for trying to help!!!