| Under the right circumstances, yes. HOWEVER (and that's a big "however") in addition to paying all disposible income into your Chapter 13 plan, you must pay the non-exempt portion of your homestead's equity into the Plan, too. From a practical standpoint, what ends up happening is you pay your disposible income into the Plan and then you end up refinancing toward the end of the Plan and paying non-exempt equity into the Plan.
The trick to avoiding that whole mess is to take out additional debt secured by the homestead, and spend that money on acquiring/fixing/improving exempt assets. That strategy has two effects: (a) it increases allowed secured debt, which in turn COULD allow you to pass the means test and get into a Chapter 7; and (b) it reduces the amount of non-exempt equity you would otherwise have to pay into the Plan. Incidentally, this is how the creditor's lobby royally screwed itself with the new bankruptcy legislation. It's a major loophole in the whole means test fiasco and allows some debtors who never could have gotten into a Chapter 7 to pass the means test with flying colors.
But lawyers aren't *allowed* to tell you to incur additional debt in anticipation of bankruptcy (a prior restraint and a violation of little thing called the First Amendment, perhaps?) so ignore whatever I just wrote, if I wrote anything at all to begin with. I think I was channeling Rasputin there.... | 
08-20-2006, 05:49 PM
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