Question Confused on IF I can file BK or not

[JimmyNeutron]

Hi,
So, I went to see two different BK lawyers within the last week and I got two different messages.

Quick Info:
State: California
I have a 2nd loan; a home equity loan of about $60K
I have a business lease that I walk away from and the landlord wants $28K to settle the lease.
Neither one of them have sue me in court yet.

1st Lawyer:
He said I cannot file BK yet because my creditors(home equity loan & landlord) have not come after me. Since there is no damages yet, I can't file Chapter 7 BK.

2nd Lawyer:
He said I can file Chapter 7 BK to wipe it out now and prevent the two creditors from coming after me.

1st lawyer didn't make sense because if the home equity creditors sues me and the landlord doesn't sue me till AFTER my BK is done with, than Chapter 7 BK would only wipe out the home equity dept and not the landlord debt and this wouldn't make sense at all.

Personally, I think 2nd lawyer sounds more right, but wanted to get everyone opinions.

Thanks in advance!

[blessed]

Maybe the 1st guy just doesn't think you NEED to file yet, can't isn't the right word. I'd get a 3rd opinion and consider retaining #2 or #3 if you're comfortable with either of them.

[kornellred]

Anyone can file for bankruptcy for any reason they choose. I don't know a thing about Chapter 11, but as an individual, you must qualify for Chapter 7 or your case will be dismissed. If Chapter 7 is not an option for you, Chapter 13 is where you will end up.

Then, it becomes a question of whether or not it will do you any good at all - in view of your circumstances.

Good luck.

[OutofTime]

Not sure how a lease works regarding Ch. 7 but I was told that I couldn't include my 2nd mortgage Heloc in a Ch. 7 and would have to do a 13. But as others have stated above, talk to more attorneys and see what they think.

[Mensa1]

Not sure how a lease works regarding Ch. 7 but I was told that I couldn't include my 2nd mortgage Heloc in a Ch. 7 and would have to do a 13. But as others have stated above, talk to more attorneys and see what they think.

Oh you could file a Ch 7, assuming that you meet the means testing relative to income. What the Atty was telling you about the 2nd mtg is that if you filed Ch 7, you would be personally relieved of obligation for the 2nd mtg, but the recorded mtg is still of record and could still collect. By filing a Ch 13, the Jr mtg/lien(s) can be stripped from being secured by the property and treated as unsecured debt; just like any of your CC's or other unsecured. In 5 yrs the debt and the 2nd mtg are both gone for good. So that is the difference.

[momofthree]

Do you have any credit card debt? Or is it just the home equity and lease?

The chapter 7 will not get rid of the 2nd mortgage lien, just FYI, they can still foreclose if they choose, or if you sell the property, they will be entitled to any proceeds before you.

[JimmyNeutron]

Oh you could file a Ch 7, assuming that you meet the means testing relative to income. What the Atty was telling you about the 2nd mtg is that if you filed Ch 7, you would be personally relieved of obligation for the 2nd mtg, but the recorded mtg is still of record and could still collect. By filing a Ch 13, the Jr mtg/lien(s) can be stripped from being secured by the property and treated as unsecured debt; just like any of your CC's or other unsecured. In 5 yrs the debt and the 2nd mtg are both gone for good. So that is the difference.

Ok. This is scaring me a lot now. How do I know if my 2nd home equity loan is able to be wipe clean and the bank will not be able to come and collect from me at anytime after my BK are filed and done?

Could you please help clarify what you mean and what you mean by mtg? Sorry, this is completely new to me.

As for my situation, my home is already foreclosed on and was sold at a public auction less than a month ago. My wife and I are in the process of working out a Cash for Keys since the home is already sold at an auction. My wife total income is around $55K/year and I'm been on unemployment for over a year now; $950/bi-weekly.

Will I qualify for Chapter 7 for BOTH debts and once BK is file, can the bank and/or landlord still come after me and my wife? From what you said, it sounds like they can still come after you, but how if you file for BK?

Thank You!

[Mensa1]

Ok. This is scaring me a lot now. How do I know if my 2nd home equity loan is able to be wipe clean and the bank will not be able to come and collect from me at anytime after my BK are filed and done?

Could you please help clarify what you mean and what you mean by mtg? Sorry, this is completely new to me.

As for my situation, my home is already foreclosed on and was sold at a public auction less than a month ago. My wife and I are in the process of working out a Cash for Keys since the home is already sold at an auction. My wife total income is around $55K/year and I'm been on unemployment for over a year now; $950/bi-weekly.

Will I qualify for Chapter 7 for BOTH debts and once BK is file, can the bank and/or landlord still come after me and my wife? From what you said, it sounds like they can still come after you, but how if you file for BK?

Thank You!

Ok Jimmy, this post helps because in the orig post it wasn't clear whether you still had your home, which I assumed you did. So now that we know "no more house" then forget the post about Ch 7 vs Ch 13. Atty 1 must have simply been saying that right now you don't need to file, as opposed you can't yet file, since now no creditor is coming after you YET. I don't think it is a good idea to wait until the house is in full blaze to call the FD; if you see smoke and suspect a fire, most of us call then, before we have a 10 alarm fire.

So your HELOC wasn't for the purchase of your home, it was incurred after you purchased; correct? That is the only way in CA that a lender on RE can get a def judgment against you, so it must have been debt after the purchase. You could wait to see what happens with the Lease as well as the HELOC but if it turns into a problem after you are back to work then you may have more of an issue passing the means test then, with more income. The result of that would force you into a Ch 13 if you made too much $$$. So only you can decide when it is time to file, but I would tend to agree with Atty # 2, w/o knowing all the details more than we know already.

mtg= mortgage, which the term you would know is deed of trust; it is the security instrument against you property that give the lender the right to foreclose on one house. The two terms are interchangable, some states use mtgs other use dot, but the same thing.

Bk will definitely wipe away the lenders rights on the 2nd loan heloc; not to worry. The landlords ability to enforce the lease will be gone too. You just need to decide when is best and that you have taken full advanate of being able to include everything you want or need to, into the Bk. You only get one shot at this thing, at least for another 8 yrs, so make sure all obligations that are dischargable are included at the outset.

[BCA2009]

Just to emphasize what mensa said. If you include the landlord in the BK, it doesn't matter if he has sued you yet or not, the debt will be wiped away and he can't come after you later.

[JimmyNeutron]

So your HELOC wasn't for the purchase of your home, it was incurred after you purchased; correct? That is the only way in CA that a lender on RE can get a def judgment against you, so it must have been debt after the purchase.

Yeap, you are correct. The home was originally purchase using only one home loan; no 2nd mortgage was require. After we took possession of the home, a few months later, my wife and I refinance the home at which time, we also took out a home equity loan($59) to help fund my wife's small business.

Guess can't vs not needed is indeed a BIG difference. After my discussion w/ the 2nd lawyer yesterday, my wife and I do feel a Chapter 7 now would be best. If I was to find a job in today economies, it's unlikely I will be getting pay as much as I did before I got layoff. This would mean paying off the $59K+$28K debt+interest+and god knows what other fees they want to add into that even harder.

Thanks everyone!!! I really do appreciate EVERYONE help during these rough times.