Current on mortgage, late on HELOC - can I include this in BK7

[Epic]

I am current on my mortgage, but I have not paid on my HELOC in over two years. Can my HELOC be included when I file?

[lrprn]

I am current on my mortgage, but I have not paid on my HELOC in over two years. Can my HELOC be included when I file?

Because your second mortgage is secured by the home, the only way to strip the second and keep the house is if you can file Ch 13. You can't strip the second mortgage and keep the house if you file Ch 7. Unfortunately chances are if you qualify to file Ch 7, you likely don't have enough disposable income to file Ch 13.

Now is the time to think ahead and be very realistic. Although it's very easy to get emotionally attached to your home, the bottom line is a house is just a thing. Your family and their ability (and yours!) to live without unnecessary financial stress is far more important in the long run.

If your house is worth considerably less than you owe on it now, the chances of it recovering that value within five years is very, very small if there's even a chance. You could be giving up a golden opportunity to get completely out from under both mortgages by surrendering the home when you file Ch 7. Depending on which state you live in and how aggressive your mortgage lenders are, you could surrender it and still stay in the home for quite some time without paying anything while banking all those dollars.

Talk over all your options with your lawyer and be sure you understand the long-term consequences of whatever you decide to do. Good luck!

[Epic]

Thank you for the response, the reason I ask is because I just got my mortgage remodified under HAMP. My new permanent mortgage payment is over half of what my original one was. Way way below what it would cost to rent an apartment. Therefore, it would cost MORE to get an apartment. Even I can't get over how low it was.

Don't have a lawyer yet, Just ordered the Nolo Chapter 7 book because it said it could point me in the right direction for a decent lawyer in my area as well as get educated in the process
Should I attempt to become current on the LOC...or too past that now?

[daytona]

Is your house worth less than the 1st? Assuming it is since 2nd hasn't been paid in 2 yrs and no action by them. How much less? Asking because it will help you determine how likely the 2nd would be to settle for say 5-10% and release the lien and will help determine if it's worth trying to bring the 2nd current...not likely on the last point.

[tcreegan]

Hi epic,

In your other thread I asked why reaffirm, now here is the answer....great terms? I am glad to see someone getting a HAMP, I negotiated for months and finally gave up and filed. Just a quick check, interest rate fixed for the whole term or only fixed for a time then goes back to adjustable? Is the modification for the whole loan term or only the next 5 yrs? Our lender was quite sneaky on these points.

Your question on the 2nd depends on the equity you have in the first. If you have little or no equity on the 1st, the 2nd is essentially worthless and I have seen plenty of posts of folks settling for pennies on the dollar.

Definitely include it in the BK, then try to settle w/ them after it gets discharged (b/c the lien on the house survives a Ch7)

Great job getting the HAMP!

Tom in Colo

[iv65536]

If the first plus tax and (if applicable) HOA dues is less than rent, I would continue to pay that and not pay the second. If the second wants to foreclose, they have all the expenses and would have to pay off the first, it probably won't make sense for the second to foreclose. The second can threaten to foreclose, but it's just that - an idle threat. (I got the second to leave me alone by telling them that notwithstanding their disclaimers, I did consider their mail and phone calls to be an attempt to collect.)