Hi. My wife and I own a house that is severely underwater. We have two mortgages on the house and owe a total of $800,000 on a house that is currently appraised at around $500,000. The first mortgage is for $550,000. Are there debt limits for a Chapter 13 bankruptcy and will we have too much debt to take advantage of bankruptcy? Also, is it OK to use a bankruptcy petition preparer in MA? Thanks.
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The Editor, Mark Bernardin, is an attorney living in MA. Please send your suggestions or comments to: TheEditor@malawforum.com
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There are debt limits for a
There are debt limits for a Chapter 13 filing, but I don't think they will apply to you. Of course, you need to talk to a bankruptcy attorney, explain the totality of your financial situation, disclose all of your various debts, and let her explain your options.
The current maximum debt limits for Chapter 13 debtors are $336,900 in unsecured debts or $1,010,650 in secured debts. In some cases, a second or third mortgages that is totally “underwater” (a mortgage is totally underwater when the first mortgage holder is owed more than the property is worth) may be deemed to be unsecured. So, if you add your second mortgage to your other unsecured debt and the total is over $336,900, then it's possible you may be ineligible for a Chapter 13 bankruptcy.
As to your second question, bankruptcy petition preparers can operate legally in Massachusetts, but I have concerns about their use. You can read that post, but especially in a more complex bankruptcy, I would recommend an attorney. Good luck.