home equity loan while in chapter 13

Hello Harp4, and welcome!

Having been through (and still dealing with) Chapter 13 myself, and having checked into the whole refinancing idea, I have to tell you it will be difficult. At this point in time, with all the lenders tightening their lending criteria, you will be hard pressed to find someone to refinance you if you are currently in a Chapter 13. It sounds as though you are looking to refinance a 2nd mortgage...or are you looking at ADDING a 2nd mortgage or home equity line of credit to pay off the Ch. 13?

I hate to say it, but it sounds like your best bet at this point might be to stay with the Ch. 13, unless you have no other choice. I think the lending issues that are currently happening with the mortgage meltdown are causing many people a lot of heartache. Someone who could have refinanced or gotten a home equity loan 6-8 months ago now finds that they can't, due to the increased restrictions on lending.

Finding a lender that will approve your request would be the hard part. But you would also have to obtain the court's permission in order to incur this new debt -- that will definitely be a requirement of the lender because they would be afraid without court permission then you could later amend your filing and include them in your whole 13 plan.

Good point DebtCruncher - in my babbling reply, I forgot to mention that! Incurring a new debt like a mortgage, purchasing a car, etc. requires prior approval by the judge.

there is no way to 'pay off' a chapter 13. you keep making payments to the plan, until the time has expired. if you pay extra, it doesn't get you a discharge any sooner -- you just pay more toward anything unsecured.

for example, if i decided to refinance my home, while it would lower the overall monthly mortgage payment, anything extra i received after the 'payoff' of the original mortgage (i.e. equity)
would not negate me continuing to pay to the plan for the remainder of the 36 or 60 months I was originally confirmed for.

you also need approval from the court / trustee to incur new debt -- ANY new debt.

Unless you can refinance enough to pay off completely all the original debts -- not the amount that may be 'unsecured', but what each creditor actually says you owe -- which with a mortgage or two, credit cards, and any cars or other loans, could easily be 200-300K, you will not get ahead or out of bankruptcy (chapter 13) any sooner.

Once you're on the Chapter 13 plan, your only option (other than winning millions in the lotto) is to pay each monthly payment in the plan, utnil you've completed it -- 36-60 months after filing....