Question about divorce and getting rid of the house

[ugghh]

This question is for my friend. I filed chapter 7 and the rules just are not the same.

She married a guy that ex-wife is responsible for the car and he is responsible for the house even though they are both still on the 'titles'. His ex is 2-3 months late at least 2 times a year (last two years) and is killing his credit. His house is upside down by 80k at least. Other than that my friend and her husband has paid off all their other debt other than one credit card of about 6k. They have about 20k in the bank. His credit is ruined because of the car and some of the other items that he had in his past. They want to file a Ch-13 and get rid of the house and the 2nd on the house along with his name on the car.

So really the main question is - they basically want to give up the house and the car that his name is associated with and pay all other creditors. I know in a Ch 7 you can not play favorites but I am unsure on 13s. Any help?

Thanks!

[AngelinaCat]

If you can, try to get your friend to come to the forum. It will be best for her to ask questions and get suggestions/answers directly. Every case is unique, with nuances that is difficult for an intermediary to properly convey.

If she does not wish to do that, please encourage her to schedule at least three free/low cost consultations with different BK attorneys to give her an idea of what to do/expect.

[ugghh]

I can, she is just not one to get on the computer. I was just hoping for a in general which I know is kinda hard. From what I am reading it looks like she will need to do a 100% payback and drop the house. Just don't know about the 2nd. Still lots of reading.

Miss the BKForum It helped me out so much during my trying times. It is amazing how things can turn around so quickly though!

[LadyInTheRed]

I agree that your friend should post here to make sure we get the fact straight. But, I will give a general answer to your question.

So really the main question is - they basically want to give up the house and the car that his name is associated with and pay all other creditors. I know in a Ch 7 you can not play favorites but I am unsure on 13s. Any help?

Thanks!

There really isn't much difference between a Chap 7 and Chap 13 where this is concerned, especially if the debtor wants to give up the assets. Regardless of what Chapter a debtor files, he must list all of his debts and creditors on his petition and all dischargeable debts will be discharged unless he reaffirms (that's where you don't get to pick and choose). In both chapters, a debtor can decide which assets to keep and give up, assuming he can afford to keep what he wants to keep. For debts that are in arrears, it is easier to keep an enumbered asset in Chap 13 because the debtor has a chance to pay the arrears during the plan, while in a Chap 7 he needs to bring the payments current or make arrangements with the creditor to prevent foreclosure/repossession. If a debtor gives up encumbered assets in a Chap 13 or 7, then his personal liability for all debts secured by those assets (including 2nd mortgages) will be discharged, but the liens will remain. In a 13, it is important that the plan provides for the surrender of the home. Otherwise, the mortgage is not discharged. That's an important distinction between a Chap 13 and Chap 7.

ETA: A BK will not remove the debtor's name from the vehicle title. That won't happen until/unless the bank repossesses it. Also, if that $20K cannot be exempted, it will create a minimum that must be paid to unsecured creditors during the plan. If there is a deficiency on secured debt, the creditor could file an unsecured claim for the deficiency.