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Do I file for chapter 7, 11, or 13?

Sun City, CA |

We had an equity line of credit on a home we no longer live in. The home was foreclosed & resold by the Lender. We have been trying to negotiate an unsecured 3K credit card and the 66k equity line of credit (same bank). My spouse lost his job. We wrote to the attorney we could no longer offer the original lump sum, offering half. Today we received a copy of the Petition for Summary Judgement. Can these 2 debts be included in a bankruptcy? We can manage our current mortgage and one of our 2 car payments on one income. Do we risk losing both vehicles and our current home?

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Attorney answers 4


There would be advantages to filing a 7, in my opinion. A 13 could help you too. Chapter 11 is for corporations.

Go consult with a local bankruptcy lawyer, most all offer no cost consults, so you can get all your options without spending anything.

Good Luck!

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Whether you file for Chapter 7 or 13 Bankruptcy is dependend on many factors. First, based on the Means test, which measures disposable income, do you qualify for Chapter 7. If not, Chapter 13 would be the option available to you. If, on the the other hand, your debt ceiling is too high, you may be left with Chapter 11, which is usually only reserved for corporations.

In any event, you can include all of your debts in the bankruptcy, including all judgments.

As you can tell, this is quite a complicated matter and you should consult with a bankruptcy attorney in your area.

Good luck.


Agree with the above comment, with the exception that Chapter 11 is for corporations. Chapter 11 also is for individuals in certain circumstances (usually many assets, liabilities in excess of Chapter 13 limits) -- although I agree this doesn't sound like an instance for a chapter 11 case. You should consult with a local attorney who can provide better advice with more detailed information based on the exact circumstances of your case.

Mr. Traurig is a bankruptcy attorney licensed to practice in New York and New Jersey. His response here does not constitute legal advice and does not create an attorney/ client relationship. The response is in the form of legal education and is intended to provide general information about the matter in question. Many times the questioner may leave out details which would make the reply unsuitable. Mr. Traurig strongly advises the questioner to confer with an attorney in their own state to acquire more information about the specifics of their case.


Although you raise a number of issues and the information is not complete, assuming that there is no fraud involved with the lender and you pass certain tests, you can file for a chapter 7, if you do not meet the tests, a chapter 13 can give you time an probably increase your negotiating position. In a chapter 7, the debts would likely be discharged. There are many implications to bankruptcy, so you really need to speak to an attorney to review your entire situation. First though, I would negotiate with the lender and see if an acceptable settlement can be worked out, you may even communicate to the lender that you are looking at your options in bankruptcy. There are also tax implications that may effect your decision as to what to do since any reduction from the lender is likely to be taxable. Bankruptcy may also help with this problem. Again seek competent counsel.