1st Mortgage and HELOC

[themeis]

Hello;

What happens to the 1st Mortgage and 2nd HELOC (ARM) in a Chapter 13 Plan?

Obviously there is no way that either will be paid off in 3-5 years since we owe 115K on 1st and 150K on 2nd. House is worth approximately 250K.

After the plan period are we right back where we started (except with less unsecured debt)?

Thanks.

[lrprn]

What happens to the 1st Mortgage and 2nd HELOC (ARM) in a Chapter 13 Plan? Obviously there is no way that either will be paid off in 3-5 years since we owe 115K on 1st and 150K on 2nd. House is worth approximately 250K. After the plan period are we right back where we started (except with less unsecured debt)?

You or your trustee will continue making your secured asset payments throughout the life of your plan. At the end of your three or five years, you'll owe three to five years less on your secured loans.

After your Ch 13 discharge, you'll continue making your secured payments until the loans are paid in full, just as you would if you had never filed.

The exception is if you can strip your second mortgage in your Ch 13 plan because your house is worth less than the first mortgage. The second mortgage is wiped out at the successful end of your Ch 13 - you pay nothing more on the second mortgage, but still pay the first if you want to keep the house.

[themeis]

I forgot to mention that our 2nd HELOC is adjusting upward to twice the payment amount in the future - which is the main reason we are thinking of filing...as part of the repayment plan - is this something that can be negotiated since we couldn't afford this increased payment to begin with?

Thank you.

[Skipper]

I forgot to mention that our 2nd HELOC is adjusting upward to twice the payment amount in the future - which is the main reason we are thinking of filing...as part of the repayment plan - is this something that can be negotiated since we couldn't afford this increased payment to begin with?

Thank you.

You can attempt to modify the terms with the servicer of the HELOC.

Skipper

[themeis]

Then I guess that it wouldn't make any sense to file a Chapter 13 if we couldn't afford the 1st and 2nd HELOC Mortgage payments (after the increase) to begin with?

[Flamingo]

Then I guess that it wouldn't make any sense to file a Chapter 13 if we couldn't afford the 1st and 2nd HELOC Mortgage payments (after the increase) to begin with?

You have to truly decide if you are able to afford to keep your home. Filing bankruptcy may wipe out debts or parts of debt in a Chapter 13 but itdoes not solve income, job or cash flow problems. It makes sense to try to keep a home if you are able if you have a lot of equity in the home. That is what we did and it was not easy to do so, but we are glad we did as we are in a hugely better place now...You need to put together a complete listing of all your bills, monthly payments, sources of income, listing of assets and make several free consultations with BK attorneys in your area. Also take with you paystubs and your most recent tax returns. Getting professional opinions always helps and a good attorney will not just tell you what you should do, they will give you options if those options are a possibility. Best of luck to you.

[junquemayle]

Also - take a close look at the HELOC papers. I haven't filed yet. However, while gathering my documentation, I discovered that my HELOC (32k) was actually a 10-year term, which will come due in 2014. Since I had been paying interest-only this whole time, I still owe almost the entire amount. I was panicking about finishing the plan in 5 years, and then having to immediately come up with 32k. My atty told me that because it will come due w/in 5 yrs, that when we file, we can put the full amount in the plan and include it. So, when my 5 years is up, the HELOC will be paid in full. First bit of good news I've heard yet...