Took A Risk and not Good Results

[chrissy92972]

So even though it was not re a ffirmed and it was not on the list of creditors to be discharged, they cannot legally do anything at this point? As long as we continue to pay the 1st we should be ok for now. 1st is a 30 year with 19 plus years left.

[chrissy92972]

Thank you everyone for your advice!!!!!

[ValleYum]

If you didn't reaffirm the home equity loan with B of A, they won't "make a move" other than charging off the debt and continuing to send billing statements. They CANNOT sue you for the debt, nor make harassing telephone calls to collect, because your bankruptcy discharge forbids that. Thus, you should quit paying the HELOC, let it charge off, and in a few years, try to settle. They won't foreclose, because there's no equity to foreclose on.

If there is 30k to 40k in equity after the balance of her first mortgage is paid (which reading some of the OP's earlier posts lead me to believe - 85k balance on first and home appraises for ~130k), BOA certainly could foreclose and come out better than a charge-off which would in her recourse state leave her on the hook for whatever amount a sale doesn't recoup plus BOA's legal fees as well as the cost of the foreclosure and sale.

Am I missing something that would not make it very likely (IMO) for BOA to foreclose from its junior leinholder position?

[chrissy92972]

On the first we owe about 85,000 and on the 2nd we owe about 45,000. According to zillow our house is worth 112,000. Not sure I believe that but in 2010 it was appraised at 130,000.

[ValleYum]

That is still over around 30k available after paying off your first should they decide to foreclose. I just don't want you to think nothing will happen when that possibility exists - at least in my eyes it cartainly does.

I am not being mean, chrissy, I am just curious as how this may play out for your little family.

[sofarsogood2]

OP-"So even though it was not re a ffirmed and it was not on the list of creditors to be discharged, they cannot legally do anything at this point? As long as we continue to pay the 1st we should be ok for now. 1st is a 30 year with 19 plus years left."

Was it on your original filing- the petition-, or not? If the debt was listed in your original filing, and there was no re affirmation, then it was discharged and you are no longer personally responsible -"in personam". However, they may pursue "in rem" I think, which means to go after the "thing" that wasn't paid for, if it is profitable for them to do so- and if the house is worth more than your 1st mtg. balance, then depending on how much they stand to make, they may pursue foreclosure.

I am by no means an attorney, just basing this on my understanding of what I have read.

Please talk to an attorney for a definitive answer.

Note* to sue "in personam" is to go after you personally for the amount owed. To sue "in rem" means to go after the "thing", but not the person. Bankruptcy prevents "in personam" lawsuits for those debts listed on the petition that were not reaffirmed. Again, just my understanding- speak to your BK attorney to clarify the exact status of your debt to B of A.

Sounds to me like they are pursuing the 'in rem" option.

[bcohen]

That is still over around 30k available after paying off your first should they decide to foreclose. I just don't want you to think nothing will happen when that possibility exists - at least in my eyes it cartainly does.

I am not being mean, chrissy, I am just curious as how this may play out for your little family.

I would not be so pessimistic. First of all, house values have contined to drop, and if the house was appraised at $130k in 2010, it's probably worth less than $120k now. Second, the appraised value is an estimate of what the house could sell for in a person-to-person sale when the seller is NOT in any hurry. It is by no means indicative of what a house would sell for at a foreclosure auction, and around here, houses in good, livable condition typically sell for less than 50% of their normal selling price at foreclosure. And of course, if the house is outdated or in need of repair, it would sell for even less than that.

In any case, you simply cannot afford to pay the HELOC, so whatever happens happens. I personally doubt that B of A would foreclose anytime soon, though they may wait 5 years or 10 years, so the house value increases, and you pay down the first mortgage.

[chrissy92972]

Thank you everyone for your words of wisdom and advice. I will keep you posted as to what happens, hoping for nothing, but knowing I am not that lucky.