Central District Consumer Bankruptcy Attorney's Association

Depends on the judge. Some look at the loan docs.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Feb 15, 2010, at 4:16 PM, "Steven B. Lever" wrote:

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I think it all comes down to a tracing of the purpose of the debt,
dollar for dollar. The burden of proof is on the debtor.

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Prospective debtor uses the proceeds from an equity line (2nd T/d), secured
by the residence, to invest in a business. Debtor about a year later,
prospective debt refinances residence, and pays off the equity line with a
new first, from a different lender. The refi occurred about 3 years ago.
Prospective debtor is still involved in the business, with the investment
still booked as a shareholder loan.

Is the portion of the new first, used to pay off the equity line,
non-consumer debt ? (While I have found cases that allow apportionment of the
total debt, part consumer and part non-consumer, where it had not been refi'd,
I've found nothing concerning refinanced debt.)

Any thoughts ?

Eric
Prospective debtor uses the proceeds from an equity line (2nd T/d), secured
by the residence, to invest in a business. Debtor about a year
later, prospective debt refinances residence, and pays off the equity
line with a new first, from a different lender. The refi occurred
about 3 years ago. Prospective debtor is still involved in the business,
with the investment still booked as a shareholder loan.

Is the portion of the new first, used to pay off the equity line,
non-consumer debt ? (While I have found cases that allow
apportionment of the total debt, part consumer and part non-consumer, where
it had not been refi'd, I've found nothing concerning refinanced debt.)

Any thoughts ?

Eric


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