80/20 Mortgage, Can you include the 2nd?

[vegasgirl702]

We are considering filing for a Chapter 13 or 7, not sure if we will quality for the 7 because of our income. We have an 80/20 Home Loan, can we somehow include the 2nd? I don't understand alot of the Bankruptcy rules but I have read somewhere that we may be able to include that 2nd mortgage on our house and keep the first???
Can you file a Chapter 7 if your income is over the requirment? I called one office and they say as a married couple we cannot make over $58,000. Is this correct? Are there any ways to get around that?

[justbroke]

I had typed a great response, but my computer ate it.

First, the thing about the mortgages, I assume you're talking about a "lien strip". This does not get rid of the balance, it only gets rid of the lien (and therefore makes the claim an unsecured claim subject to receiving a share of the money remaining after paying all higher priority claims, like mortgage arrearages, taxes, etc). This is for a Chapter 13 only. The value of the house (shown by very recent professional appraisal), must be less than the balance on your first mortgage.

If it is, then the second lien can be stripped away and the debt subject to "discharge" when your plan is complete. The "lien strip" is not automatic and your attorney will have to file a Motion to do this (or an Adversarial Proceeding, aka a lawsuit within the Bankruptcy).

There are no income limits for Bankruptcy. Only doing the means test will tell what Chapter of the code that you qualify for.

Keep some things in mind... a.) Chapter 7 won't save your home, b.) Chapter 7 can't "lien strip", c.) Chapter 13 will require a 36 to 60 month payment Plan, d.) Chapter 13 is used to save assets which would normally be liquidated in a Chapter 7