Expert: Robert Vitt - 6/15/2009

Question
We have never been late on any payment of any kind ever. Until this month.  We bought a home 4 years ago with a subsidy loan through USDA Rural Development and our monthly payment went up 400.00 3 months ago.  Then this month our credit card interest almost tripled.  We can no longer afford our monthly bills. We owe 275K against our home and it appraised at 208K 2 days ago. We have 3 credit cards and a HELOC on our house, so when we file Chap. 13 is there a possibility we can keep our house and discharge the HELOC and credit cards?  I know the HELOC is a secured debt but even if they tried to sell the house they couldn't even pay off the first mortgage--wouldn't all of the proceeds go to the first mortgage lender?  And lastly how soon would we have to move after filing?  Thanks so much

Answer
Tressa,

A Chapter 13 consists of a restructuring of debt and usually a partial payment of that debt.  

Your HELOC may or may not be dischargeable depending upon the amount of equity and your particular jurisdiction.  

Unfortunately, this forum prohibits me from giving you the kind of advice specific to your situation.  I urge you to consult with a bankruptcy attorney in your area.  They are usually able to provide you with a free consultation.

I hope this helps,