Interesting car situation before I file ch. 13 bk

[NeedOptions]

Smg, could you explain how part of the car would be secured and part would be unsecured? Forgive me but I am lost. Thanks.

[NeedOptions]

Before deciding to turn in the lease (which would create more unsecured debt for the penalty on the lease turn in) discuss the ch. 13 unsecured debt maximum with your attorney.

Being upside down on the house, even though you plan to keep it, could possibly count in that maximum. If you have $221k credit cards + $125k underwater on the mortgage, plus interest/penalties on cards that will accrue once you stop paying them, you could be in jeopardy of surpassing the maximum if you turn in the lease.

If the negative equity in your home DOES count in the unsecured debt max, and you surpass it, you will NOT be able to file ch. 13.

What if I kept paying on the lease and not turn it back into Honda? Would that still count as part of the unsecured debt?

[NeedOptions]

Ahh, I just thought of something. Let's say the cars are worth $50k at time of BK 13 filing but I owe $60k. Would that mean that $50k is secured and $10k is unsecured as it is upside down?

[pcn]

SMinGA is right ok, maybe its just me, but...shouldnt the attorney have advised him of all of this already?

If not, I'd find another attorney.... thats scary.

Some atty's wont recommend that you incur new debt. I think the law was recently interpreted through a court case to support that argument. Others argue that it is an atty's job to recommend whatever is in the best interest of their client. I personally would want to know all the facts and options. Your creditors, who may lose out on some $ however, may not.

[SMinGA]

Yes. If you owe more than its worth, the extra is unsecured. If you owe less than its worth, the difference is equity.

Since you may be near the 13 limit on unsecured, its important for you to find out what your district counts. They may or may not count the negative home/car equity.

If you keep the lease and continue it til the end, it would not be unsecured.

Ahh, I just thought of something. Let's say the cars are worth $50k at time of BK 13 filing but I owe $60k. Would that mean that $50k is secured and $10k is unsecured as it is upside down?

[NeedOptions]

I remember the lawyer telling me that because I would be paying the house separate from bankruptcy, it probably wouldn't count against the unsecured limit. I could be totally wrong though as I may have heard wrong.