Ch 13 and equity line - wipe off

[JackDP]

Hi,

I need advise and may be someone faced or has experience being in the following situation:

I have a house (100% title) worth let's say 300K, there is primary loan (120K left to pay off) and there is equity line (100K) on my sister name (only on her name, there is no me there, she is not an co-owner, sheisnot leaving there, it's rental, don't ask how we did this and how bank agreed).
She is going file Ch 13. Her attorney said that the bank won't wipe off equity line amount because the value of the property is higher than the sum of mortgage and equity line (300K-120K-100K=80K). I don't have possibility (or I think that I won't have) for refinance equity line in case when my sister file Ch 13, my credit is bad
My question is If she will be fil Ch 13 - what could happen with this equity line?

In addition: it's true that she wants to get rid off this 100K lin even by filing bankruptcy (which will help her to wipe off other debts that are much smaller). Does anyone had experience with such situation?

I appreciate your advise or where I can read in more details.

Thank you very much!

[despritfreya]

Ok, based upon the info supplied I am going to assume the following (tell me if I am wrong):

1. You own a rental in your name only. The rental is worth $300k.
2. You have a mortgage in your name only. (This is the 1st lien on the property.) You owe $120k.
3. Your sister took out a loan (you are not on the loan) and you allowed her to use your rental as collateral. Therefore you now have a 2nd lien on your property. Your sister owes $100k.
4. Your sister is going to file a Chapter 13. Since she does not own the rental and there is equity in the rental, her lawyer told her there is nothing she can do as it relates to the lien on your property.
5. You want to know how this will effect your rental.

Assuming all of the above is correct:

1. Since SHE is not on the title to the rental, the loan should be listed in HER bk as a general unsecured claim. The collateral used to secure the loan does not belong to her (or the bk estate) therefore the loan is unsecured as to her.

2. Her bankruptcy WILL NOT get rid of the lien (2nd mortgage) on your rental but she will no longer be responsible for payment of the loan.

3. If the lender is not paid the lender will foreclose on your rental since there is sufficient equity in the property to cover its 2nd position lien.

Bottom line, if your sister does not continue to pay the loan (which I doubt she will since such is not going to be allowed to in her bk) and you do not step up to make the payments you will eventually lose your rental property.

Des.