BK on Second Home

[Bouncer]

We started building a new home approximately 18 months ago. We had a buyer for our current home, who back out prior to closing. We kept the ernest money but now are stuck with this mortgage payment. The mortgage is current but draining our cash reserves. The balance is $79k, and the home appraised for $110. However homes arent moving, and there are more rentals on the market than renters. We called the bank to refinance for a lower payment, they refused because it is a modular. The mortgage is 8 years old and they have changed their lending policies since then. I dont think anyone else will lend on it either since we are not planning to live in the home. And refiancing fees with another lender, carrying costs, and realtor fees will exceed any profit we could hope to make.

Is there a bankruptcy option that could eliminate this debt, and this debt only. Without jeprodizing our current home!

[justbroke]

Is there a bankruptcy option that could eliminate this debt, and this debt only. Without jeprodizing our current home!

Yes. First, the key would be do you qualify for a Chapter 7 or Chapter 13. Under either, you could get rid of the second home. Which chapter is determined by income... and determined by the so-called means test.

If you are current (not past due or defaulted) and not in foreclosure on your first home, then you could, if qualified, do a Chapter 7.

If you aren't current on your primary residence, you'll have to do a Chapter 13. You'll have to be in your Chapter 13 for 3 to 5 years (depending on income), and live under a tight budget.