What happens to my heloc after chapter 7 in california

[Tgpatrsn]

I just went through a chapter 7 here in California. My home had a 1st mortgage($640,000) and a heloc($120,000). Both of those loans were discharged in my chapter 7. I then contacted the first(wells Fargo) and asked if they could modify my discharged 1st mortgage. After 3 months of trying to modify my loan they did it. I have not signed anything but my second(heloc) put a lien on my property. My first and second are with wells Fargo. My home is worth $575,000. Wells Fargo is getting a subordination for the second. If I go through with this, say 6 years down the road, when the house may have some equiity, can the second force me to sell the house?

[StartinOver]

Wait... if you are certain that your home would appraise at 575K, then you are underwater on the first and you can probably file a Chapter 13 to strip the lien for the second. The second is already discharged, but lien stripping it will protect the house when equity increases and you're right side up again on the first.

Consult your attorney about whether and how to go about this.

[HOMEBODY]

why not just settle the lien on pennis on the dollar. Start of with 5% and see what happens.

[Tgpatrsn]

The house appraised for 575k. Can I file a ch 13 3 months after being discharged on my ch7? How do I go about settling the heloc with wells Fargo? Thanks

[despritfreya]

The house appraised for 575k. Can I file a ch 13 3 months after being discharged on my ch7?

Getting rid of the wholly unsecured 2nd in a Chapter 13 on the heals of the entry of a Chapter 7 discharge depends which district you file in and which judge you pull. I have read at 3 cases out of Ca - 3 different judges. 2 said you cannot strip the lien since you are not entitled to a 13 discharge. 1 said you can. There may be other cases but those are the ones that I have seen. You need to meet with a well qualified bk attny to find out the current status of the "interpretation of the law".

Des.

[Charlie777]

So you don't owe anything on the HELOC, because it was discharged. They retain a security interest in your home. Since your debt is extinguished they can't force you to sell the home, but they are entitled to all proceeds after the first lien is paid.

You're currently underwater on the home. You will be reducing principal on the first, and the hgouse might appreciate. So look at the amortization schedule on the first, and figure appreciation, say 3% /year. Use those numbers to back up a small offer to settle the lien. Tell the bank you may file Ch 13 and strip their lien as an alternative, what would they prefer? Some money now is worth a lot more to them than nothing, or some money many years in the future.

[momofthree]

The 2nd can foreclose on the home once you have equity again, and if you sell in the future, they will be paid after the 1st is paid off. Like a pp mentioned, settling the balance is probably your best bet if you want to retain the house long-term.

[Tgpatrsn]

I just talked to my attorney and she said I can file a chapter 13 to strip the lien from the second. I will try to negotiate with the second first but if that doesn't I will go for a chapter 13. Thanks for everyone's help

[1richard1]

What county do you live in? My attorney for the Central District Court, here in Orange County CA advised as follows:
After a Ch. 7 is discharged, a Ch. 13 can be filed immediately. However, pertaining to including a 2nd mortgage for lien strip purposes
we must wait 4 years to file the Ch. 13.

We're in a similar situation as you, would prefer to file a Ch. 13 now, after a Ch. 7 discharged. Our 2nd is a heloc, different lender then
our first mortgage company. First mortgage is paid, current yet second is fully underwater, unsecured and in default status. Second mortgage
holder says they can initiate foreclosure proceedings, yet unlikely since they'd get $0.

Any advice