In a pickle.....

[Xolodno]

Well, I swore I would never get back into this situation....but alas...sometimes life seems to smack harder than anyone can expect or prepare for. Anyway, I live in California, house underwater, HELOC is now required to pay principal this month (way more than I expected) and Bank of America which now owns it is not very accommodating.

Oh, and I have assets, so chapter 7 is out of the question. The assets are:

1. Current home (Mortgage and Heloc current)..and underwater.

2. House across the street, in my name plus mortgage (and not underwater) but my mother lives in it (disabled) and even though she is on Social Security, she does get an inheritance check (equal the mortgage) which pays for it.

3. Family vacation home, in a joint tenancy with my siblings. No mortgage and paid in full.

4. Oh and a paid off timeshare....which on the market would be pretty worthless.

I know chapter 13 is supposed to protect basic assets, but before I consider paying a lawyer money I don't have, does anyone know if they will allow me to keep any of the above? I feel pretty hopeless at this point. Any help is appreciated.

[LadyInTheRed]

You can keep all of your assets in a Chap 13 as long as you can propose a plan that will pay unsecured creditors at least what they would receive in a Chap 7 liquidation. So, add the non-exempt equity of your interest in assets, divide by 60 months, add 10% for trustee fees and that will give you an idea of your minimum plan payment in a 60 month plan, assuming you don't include any attorney fees in your plan. You must show enough disposible income to pay at least that much. If your income is below median ($47,683 for a single member household in CA, more for each person in your household), you can propose a plan that lasts as little as 36 months, but that will increase your minimum payment required to pay unsecured creditors.

If you can't afford to make a large enough payment, you may need to accept the reality that you need to give up some of your assets. Keep in mind that if you don't have equity in your home, there is no value in the asset to exempt. So, you would not need the homestead exemption and would probably used California's system 2 for exemptions, which gives you $23,250 in exemptions that can be applied to any asset. See my blog entry for more on California exemptions: http://www.bkforum.com/entry.php?336...tcy-Exemptions

Also, did you know that if the value of your home is less than the balance of your first mortgage, you can strip the HELOC in a 13 and it will be treated as unsecured debt and discharged when you complete your 13?

Most bankruptcy attorneys give free consultations. You should consult with a couple before you decide what to do.

[Xolodno]

That's what I was afraid of...the family vacation home would throw a monkey wrench into the machine. What if I have myself removed from the deed before I file? I and my siblings were only added on to protect my mother (as my father died of cancer) and my parents removed from the deed.

[LadyInTheRed]

Transferring your interest in the vaction home to family members without consideration will not help unless you can wait a couple of years to file. The trustee could get it back in a Chap 7, so you would have to pay the value to unsecured creditors in a Chap 13. If your siblings paid market value for your interest, it would be okay, but the trustee would look at the transaction closely. So, if you decide to sell your interest to your siblings, make sure to get a good appraisal and document everything thouroughly with the help of an attorney.

There is another possiblity, but I don't know if it will work. If you and your siblings have an oral agreement with your mother that you hold the property in trust for her until her death, it is possible that you can argue you have no actual legal interest in the property, but the burden of proof would be on you. Talk to some experienced bankruptcy attorneys about that possiblity.