Open Heloc in Ch. 13

[bamawins4u]

We’ve recently filed for Ch. 13 because
of high credit card debt. We did not include our house or cars. We have an open Heloc in the 1st lien position. It is basically set up as our 1st mortgage and our checking accounts automatically dump each night into the Heloc account, so all of our money is tied up in that account and we use it to pay bills, expenses, etc. We logged into our account to check the deposit of our paycheck and it shows that we have a balance of $0 available but we should have almost $8,000. The bank is closed so we can’t talk to anyone but we are in full panic mode. Can anyone shed light on what is going on? Can you keep a Heloc open and active in Ch. 13? The total of the Heloc is about $50,000 under the value of our house, and our attorney acted like it wouldn’t be a big deal when we filed.

[despritfreya]

Welcome to the Forum. I am not quite following your post.

1. Your house and cars are absolutely included in the bk. Either you pay the mortgage and car payments directly to the creditors or they get paid in the Plan. Either way, you listed the home and cars (if not leased) as assets on Schedule A/B and you listed the corresponding debt on Schedule D (Schedule G if the cars are leased).

2. Are you trying to access the HELOC in an effort to continue to run up debt? If "yes", that is not going to happen. The lender would have shut off any future access to draw down on such a loan and probably shut off access to any on-line use of whatever account is associated with the HELOC. Further, you are prohibited from running up secured debt while in Chapter 13 without a court order authorizing such.

3. Are you indicating that the bank applied a recent deposit to pay down the already existing HELOC debt? Was this deposit made before or after you filed? Why are you banking where you owe money?

Not enough info.

Des.

[justbroke]

I hope your HELOC account is not behaving like a checking account and you're using direct deposit of your payroll into that HELOC account. That's would be bad news.

As des wrote, that account should be closed. You are in a Chapter 13. You should not be touching that account. The bank should not be touching your deposit accounts. This is another reason not do hold demand deposit accounts (DDAs) at a bank where you have credit products. I know that people do it; I do it. But when in bankruptcy you don't want to have issues with your checking account and other DDAs.

[Carmella]

I hope you were able to talk to the bank or your attorney and figure out what happened. I do not follow how that worked with the checking account dumping into the HELOC.

We had a HELOC. But we just made payments and on it and never took out any more credit on it. When we filed the account was closed we couldn't draw from it, but we could still pay monthly on it. We also lost online access to pay the Mortgage, HELOC and car payments. I had to call and transfer money from the checking account to the mortgage and HELOC payment. A year or so into the BK they brought back the ability for us to pay it online. The BK dept at the bank told me that was impossible, but I had access so I paid that way. For the car payments we paid through a third party for one and the other was at a local bank so I went in person to pay.

It's all very confusing. I hope if your checking account or direct deposits were going into the HELOC you were able to get it straightened out and keep it separated.

Please update us.