Reader’s Question: I have a home equity loan and owe 1/3 of the homes value. I have another loan that was to be paid by a previous Corporation that I was the President of and I signed and agreed to pay the loan if the company went out of business and the company went out of business in 2011 my balance is is $65,000. to one of the stock holders in the Corporation. I have credit card debt of $52,000 some of that debt was created for the Corporation. I’m presently current on all this debt. I see problems on the horizon and need to know my alternatives. I want to keep my home. Please advise.
Ohio Bankruptcy Attorney Russ Cope’s Answer
You are likely to have several options that involve keeping your house in Ohio. If you are current on your home, then Chapter 7 is an option depending on your income. If, however, we could prove that more than half of your debt was business debt, then we could ignore the income eligibility requirement known as the Means Test. In a Chapter 7, you can keep the home so long as there is not too much equity. I don’t know if the home equity line is a first or second lien, but Ohio’s new Homestead Exemption allows home owners to protect a substantial amount of equity in their primary residence. If you are not eligible for Chapter 7 for whatever reason, you will also be able to file for Chapter 13 relief.
If you are not current on the mortgage obligation, then Chapter 13 would allow you to get caught up on the mortgage during the life of the Chapter 13 plan. It can also eliminate a substantial portion of the unsecured debt that you listed above. A qualified bankruptcy attorney can evaluate all of your options fairly quickly at a single consultation.