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I may have to file bankrupcy, is it possible to keep my home and put my line of credit

North Hollywood, CA |

in the bankrupcy? I have a property that is investment but it's been liened up to 65% of its value with child support judgment will the bankrupcy court go after the remaining equity in the investment property and most important can I keep my home. mortgage 650,000.00 2nd lien 250,000 third lien 930,000... house is valued at 1,000,000 Thank you

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Attorney answers 4


There are too many factors involved to be able to thoroughly answer your question in this type of forum. You would be best to arrange for a consultation with a local bankruptcy attorney (most offer a free initial consultation) who will be able to review your entire financial situation and determine the best approach for you under the bankruptcy code and will be able to advise you as to the pro's and con's of each approach, and whether bankruptcy is even your best option in the first place.

Regarding your investment property, any attorney you consult with would need to know how much equity is involved in order to determine if the equity can be exempted (protected) to allow you to keep that property. It is more difficult to exempt equity in a house that is not your primary residence.

As for your residence, given the facts & dollar amounts you have stated, I would think you would have no problem keeping this property, since it is so underwater, but the real question is why would you want to? Given your figures, you appear to be underwater on this property by over $800,000.00. This might be the time to walk away from that property, with no personal liability on any of the liens. However, the nature of the liens would need to be discussed with local counsel. You state there is a $650,000.00 "mortgage", but the other two dollar amounts are referred to as liens. The type of lien, i.e. IRS tax lien, child support judgment lien, unpaid civil money judgment lien, etc., would determine the extent to which the lien might be able to be avoided and removed from the property, making it worthwhile to keep the property. Or the lien might be a type that cannot be removed and then your are back in the situation where you are extremely underwater. Another problem would be, for example, if the 2nd & 3rd liens were able to be removed, then you would be left with approx. $350,000.00 in equity on the property, which exceeds the California Homestead exemption limits, so you would risk not being able to protect the property.

As you can see, there are just too many unknown facts and too many variables in your situation to be able to effectively advise you in this forum. So, as I previously stated, I think you would be best served reviewing all of these facts and your options with a local bankruptcy attorney.


It is not clear from your description whether you have equity in the property. If there is equity, you might lose it in a chapter 7 case. With chapter 13, on the other hand, the trustee could not sell the property, but it might not be the right type of bankruptcy for you. Talk to an attorney.


Advising you as to whether or not you can keep your home based upon the limited facts here is not possible -- there are simply too many moving parts to any bankruptcy filing to render such advice without doing a complete finanial analysis. For instance, to support the value of the home it may well be that your income likely exceeds the means test. Furthermore, the debt limits appear to exceed Chapter 13 eligibility, leaving you potentially considering a Chapter 11 to accomplish your goals. Again -- this is not advice, it is simply pointing out that you need to find competent bankruptcy counsel in order to fully and properly answer your question.

Good luck to you!


Bankruptcy is an all or nothing proposition, you have to list everything you own and everyone you owe money to. If the current market value of your home is less than your first mortgage you can strip all junior liens in a Chapter 13 bankurptcy, however you cannot do that in a Chapter 7 bankurptcy. If you own investment property you can cram that property down to its current market value in a Chapter 13 and you will only have to pay what the property is worth not what is owed, however you have to pay the market value of the property in full over a 5 year period. For more information feel free to call my office at (310) 515-7799

William James Waters

William James Waters


True, however these facts seem to indicate this person may be over the $1,081,400.00 secured debt limit of Sect. 109(e) and therefore may not be able to file a Chapter 13.

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