Legal Question in Bankruptcy in California

Good morning.

Nonsecured debt such as lines of credit are typically eliminated (discharged) in bankruptcy.

Certain amounts of equity in one's home are exempt (protected) from liquidation in chapter 7.

However, if your line of credit is secured by your home, then the lender will retain its security interest.

When people don't have equity in their homes, they may have second mortgages that are no longer secured by value in the home. I.e., the homeowner owes more on the first mortgage than the home is worth. In that case, they can actually remove the junior lien from their home through a chapter 13 bankruptcy accompanied by a special motion.

We'd be happy to address your specific situation in order to suggest the best solution to your needs. Send an e-mail or give us a buzz on Monday.

Standard disclaimer: the above statements are opinion with a general, rather than specific application provided for informational purposes only; they do not constitute legal advice, do not create an attorney-client relationship, and should not be relied upon as they do not anticipate all conflicts, contingencies and factors of which only an attorney of record would know. Congress keeps busy legislating and these statements may not reflect the current state of the law. All bankruptcy petitioners should seek legal counsel.

File for an homestead exemption and record it prior to filing for BK. Contact me directly as I can see you though the process for a reasonable fee or provide full representaton.