Stripping 2nd Mortgage in Chapter 7?

[biotechsolution]

Yes, you're right, the 5 years part is a bit aggravating, particularly since if I end up with a big salary jump and the mortgagor found out about it they could petition the court to have me pay them on the unsecured debt -- the same debt for which I have no personal liability due to my Chap. 7 discharge! I think as a practical matter, however, that since the lien is stripped immediately after the lien removal hearing, if your worksheet shows negative income but you offer to fund the plan -- say $30,000 to pay off all unsecured debt, paid immediately instead of over 5 years, it should be a done deal and you just have to wait an additional period of time (4 years after Chapter 7) to get a discharge. It's a little tricky, I agree. I'd much rather just settle with them, and not have to file BK serially.

I would be very leary of an attorney who claims he can get you a 'chapter 20' to remove your 2nd mortgage (lien).
It was possible before the 2005 bankruptcy law changes. The problem you are going to run into is that once you receive a chapter 7 discharge you are not eligible for another discharge in a chapter 7 for 8 years. And you cannot file a Chapter 13 to receive a discharge within 4 years of receiving a Chapter 7 discharge.
People of file a Chapter 13 right after a chapter 7 are trying to catch up on arrears or priority tax debts that weren't taken care of the during the 7 because all the debts would have to be paid back at 100%. The reason you can't get rid of your 2nd in the chapter 13 is because you cannot receive a discharge of any debt within that time frame. Stripping the 2nd mortgage is discharge of that loan.

[chad9162]

Heres a question I dont think has been asked. I'm planning on filing in a few months hoping for a CH-7. I have stopped paying all CC's, but am paying 1st and HELOC up to date + car payments. If I could do a lein strip I will, but not sure how much lower houses will go. Owe $240K on the Heloc. If I stopped paying it now, and assuming Heloc don't forclose, which i don't think they would, assuming the house is underwater about $200K, would it mess up my chances for a Ch-7 ??

Your numbers seem a bit off. Your HELOC is $240K and your house is under $200K so that tells me that the HELOC has 40K equity in the house?? If that is true then yes, the HELOC might foreclose. But then theirs the question is the HELOC willing to lose $200K to gain $40K.

If you did a Chap 13 they might reduce the HELOC to $40K taking away your $200K loss. As for messing up your chances for a Chap 7...it depends on the means test. If you are under the median no problem but if you are over the median it depends on your district. In my district they allow you to included mortgage debt in the means test even if you are surrendering the house.

Now if your mortgage lenders foreclose it might affect your means test because it would reduce your secured debt (is that what you mean)? Again this depends on how your district treats mortgage debt on the means test. Talk to an attorney in your area and get the inside scoop.

Plan was to hope for a Lein strip, if not do a Ch-7, and stop paying HELOC after discharge, and roll the dice that they don't forclose, but sell to a JDB, then I would attempt to settle with the JDB to remove the lein.

We all have the same plan.

[albacore44]

Your numbers seem a bit off. Your HELOC is $240K and your house is under $200K so that tells me that the HELOC has 40K equity in the house?? If that is true then yes, the HELOC might foreclose. But then theirs the question is the HELOC willing to lose $200K to gain $40K.

If you did a Chap 13 they might reduce the HELOC to $40K taking away your $200K loss. As for messing up your chances for a Chap 7...it depends on the means test. If you are under the median no problem but if you are over the median it depends on your district. In my district they allow you to included mortgage debt in the means test even if you are surrendering the house.

Now if your mortgage lenders foreclose it might affect your means test because it would reduce your secured debt (is that what you mean)? Again this depends on how your district treats mortgage debt on the means test. Talk to an attorney in your area and get the inside scoop.



We all have the same plan.

Hard to say where this will all end up months from now. There are 2 vacant forclosures been sitting for a year now 3 doors down. Personally I think the banks are asking too much to move the properties. dozen or so neighbors are in distress, I see their addresses listed in Realtytrac. If i can strip when I'm ready to file I will, If not, I'll ride it through, roll the dice and stop paying the HELOC after discharge, as another poster said she is doing. As soon as the economy picks up the HELOC rate will start increasing anyway, once Mr. Bernanke gets to work, making it difficult without additional income.

[debt09]

What about settling a HELOC before BK? Get the 1099 and write it off against expenses in your property or properties? Also, what about proving to the IRS you were insolvent at the time of the settlement, would that work? This is all pre BK of course just another possible senario. Trying to figure out if I should negotiate now or do a BK and then negotiate the loans? Currently, two months behind on both 1st's and 2nd's. But most of us know the 2nd's probably won't foreclose? At the same time getting ready to modify the 1st's. Thanks for your response.

[pcn]