25K underwater on primary residence; Bankruptcy option?

**mdphd** · 07-05-2010, 02:59 PM

Hello, I have been scrambling to figure out what to do and what my options are. With the downturn in the economy, I was losing money to keep my pride/small business intact so I closed that and have been doing small jobs and living off the credit cards. The primary house is 25K underwater and I don't want to lose it BUT I cannot afford the mortgage. With all of my debt, I think I will have to file for BK so I might be able to afford the monthly payments. Here is the wrench though, we have a second 'investment' property with is only worth 50K but needs 7K to pay off. If I file for BK, would I still be able to keep the investment property to try and sell it so I can get some money back to pay the primary mortgage? OR will I lose the investment house and thus with no income, the primary house?

**Maurice Bedard** · 07-05-2010, 07:25 PM

Hello and welcome to LoanSafe! Thanks for sharing your story.

It will depend on your state laws and what chapter bankruptcy you file. Chapter 7 or 13?

Both federal and state laws provide exemptions for certain property that a debtor is allowed to claim as exempt. What property is eligible for exemption status varies from state to state; however, some states allow you to choose whether to use the federal exemptions or your state's exemptions. After a person files bankruptcy, certain exemptions may apply to prevent a creditor from claiming the debtor's property. You need to check with your state.

Under a chapter 13, you will be on a repayment plan with creditors so most likely you will be able to keep the 2nd home.

Assuming you file for Chapter 7, it depends on whether you are current when you file and whether you have any unprotected equity. If you file chapter 7 and if you have equity you may lose it unless you can convert it to an exempt asset or use it to pay off your unsecured creditors.

This is really complex and it is best to consult with a local lawyer in your state.

**mdphd** · 07-05-2010, 07:34 PM

Thanks for your quick reply. It is more complex that I can comprehend. I have spoken to a lawyer and he's telling me to file for BK but to make the investment my primary residence so I do not lose the equity, and let go of the real primary house. I am in Florida and we haven't decided weather 7 or 13 is right. Only other loans include CC debt for about 30K, cars are cheap and paid for. I am just at my wits end trying to figure out what to do and how to get help. I guess if I lose my home, I will delay it as much as possible, good bye 24 years

**Maurice Bedard** · 07-05-2010, 08:15 PM

My pleasure. I know this is a very difficult time and that is why we are here. This forum is for you all to get this stress our of you and to vent. There are thousands of people here and millions in the US right now going through the same thing as you. So, please stick around and joins some other discussions here.

I would speak to a few more lawyers in your state just to get a well rounded group of opinions.There is no rush for you. Check for lawyers that are real consumer advocates with the National Association of Consumer Bankruptcy Attorneys , NACBA is the only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA now has more than 4,500 members located in all 50 states and Puerto Rico.

NACBA - National Association of Consumer Bankruptcy Attorneys

Best of luck to you!