Does the bankrupty on a home include the equity loan?

Question

Timothy Byrne · Answer

Yes.

Eric Lewis · Answer

Yes.

Jeffrey Solomon · Answer

The debt is discharged, but the equity line retains its lien.  However, depending on your case, there may be a way to "strip" your lien.  You need to consult a bankruptcy attorney to see if this is possible for you.

Austin Hirschhorn · Answer

Both the home mortgage and the home equity loan would have to be included in the schedules filed with the court if there is a home equity loan in addition to the mortgage.  If properly scheduled both loans would be included in the case.

Jay Moreland · Answer

Yes it does. In a Chapter 7 bankruptcy if you wish to surrender the home, the bankruptcy will eliminate the obligation to pay both a first mortgage and an equity loan. If you wish to keep the home and the home is worth less than you owe on your first mortgage, you may be able to strip the equity loan in both a Chapter 7 and a Chapter 13 bankruptcy. 

Stripping the loan turns it into an unsecured debt and removes the lien on the home. If your home is worth even a dollar more than the balance due on your first mortgage, you will not be able to strip the equity loan.

Roger Bus · Answer

If you file a Chapter 7 and keep the house, the home equity loan will not be discharged. It will be discharged if you reject the house. 

If you file Chapter 13, the second mortgage can be discharged if there is no equity in  the  house over and above the amount owing on the first mortgage.

Edward Olson · Answer

Your bankruptcy petitions are required to include all assets and all liabilities.

S Hunter · Answer

Whether or not the home equity loan is liquidated or wiped out by the bankruptcy depends upon what you plan to do. If your plan is to stay in the home then you will need to reaffirm both the mortgage and home equity. 

You can try and negotiate a repayment plan with the mortgage company. However, if you plan on abandoning the home then you need to make sure that the home equity and mortgage are listed as a debt so that they can be discharged. However, if you have those debts discharged you will not be able to stay in the home.

David Benson · Answer

Bankruptcy includes all your assets and all your liabilities. As a result, it does include a home equity loan. However, how that loan is treated in bankruptcy depends on whether you are in a Chapter 13 and if the loan is completely underwater.

Harry Roth · Answer

Yes, but you need to understand what that means. If you file a Chapter 7, then your liability for the equity loan is gone, but you cannot just keep the house and not pay the note. 

The personal liability is erased but the lien on the house is not.

Barbara A. Fontaine · Answer

Most equity loans are second mortgages, so they have a lien on the house as well as the first mortgagor.

Robert Sisson · Answer

Yes. The value that you have in the home, after your outstanding balance is subtracted is considered as an asset.

Robert De Groot · Answer

Yes, bankruptcy includes all of your debts.

Deborah Stencel · Answer

If you surrender your home in a Chapter 7 bankruptcy  and do NOT sign a reaffirmation agreement, you will not be obligated to pay the loan after the debt is discharged.  

The lien will not be extinguished, but once the foreclosure is complete (or the home is sold), the debt will no longer be your concern.

Shilo Naomi Borja · Answer

Generally speaking, in a Chapter 13 Bankruptcy, you can strip a second mortgage or home equity loan and make it part of the unsecured debt pool. 

There is a special motion that will need to be filed for that. Essentially if you owe more on the first trust deed than the property is worth today, you can strip the second mortgage or home equity line.

Phong Thanh Tran · Answer

A bankruptcy petition includes all your *debts* and assets.

Bernal Ojeda · Answer

Yes, make sure it's listed in your filing.

Meredith P. Ezzell · Answer

Yes.  A bankruptcy, regardless of the chapter filed (7 or 13), includes all of the debts that are outstanding at the time of filing.  You cannot pick and choose which debts to file bankruptcy on, all debts must be included.

Steven Alpers · Answer

You must list all debts. A mortgage or equity loan will not be discharged, if that is your question, unless their are unusual circumstances.

Kevin Bruning · Answer

Thanks for your question. It is a bit difficult to answer, however, as a home cannot really go bankrupt. 

Only people (or sometimes businesses) can file for bankruptcy. 

A bankruptcy discharge will remove your personal liability for your debt - credit card companies, collections agencies, and other creditors cannot attempt to collect against you any longer. 

This includes your personal liability for any mortgages or home equity lines of credit. 

However, the mortgages and home equity loans still exist as liens on your property. If those liens go unpaid, the bank can still foreclose on the home and you will eventually have to move out. 

NOTE: Foreclosure and bankruptcy are two different things, though they have something to do with each other because they involve your debt. 

If you file for bankruptcy and then go through foreclosure, then the discharge of your personal liability at least ensures that the bank cannot go after you if they sell the home for less than what you owe on the mortgage and/or home equity loan. 

If you are current on your first mortgage but not on your home equity loan, that too can create some problems and it's possible the bank holding the home equity loan will decide to foreclose anyways. Special relief may be available through a lien stripping option under a chapter 13 plan. 

You should talk to an experienced bankruptcy attorney to determine your options and the effect each option might have on your living arrangements.

Diann Moseley · Answer

Yes, all debts must be included.

Diane Drain · Answer

Your question is rather confusing.  Bankruptcy includes all your debts and all your assets.  Are you asking if you can strip your second mortgage off your home?  

If so, that answer is "it depends".

John Brennan · Answer

Yes, and get an attorney to assist you if your are thinking of filing.

Stuart Nachbar · Answer

A bankruptcy includes all debts.  If you are in a chapter 13, you MAY be   able to strip off the home equity loan and have it considered a general   unsecured debt depending on several factors.

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