HELOC question for a friend

[cj0203]

We don't personally have a HELOC, so I can't answer this question for her, so I thought maybe you'd know.

If you file bankruptcy, and have a HELOC, will the bank go after the house if you try to keep it?

[duciwish]

I'm trying to understand the question. Is the perosn filing chapter 7? Heloc is a secured debt. More than likely, she will be responsible for the debt if her intentions are to keep the house and she'll have to reaffirm on that debt.

I'm not a lawyer but work for one doing chapter 7's

[cj0203]

I guess her plan would be to file Ch7 and keep the house(I don't know why, she can't afford it - but that's another story). I figured she's still be responsible for the credit line since it's secured, but I wanted to ask to see if anyone here knows.

Thanks!

[monkatom]

If she plans on keeping the house and is current on payments than no the bank should not go after the house as she is current on her payments.

[lrprn]

It's unfortunate your friend is trying to keep a home that is beyond her means. Once she files, if the home overwhelms her financially she can't use bankruptcy to wipe out the mortgage deficits. Hopefully you can discuss this and show the error of her ways.

It's hard when emotions are involved - it's tough to see a home with memories and dreams as just a financial decision. This is one of the reasons why the mortgage crisis reached the proportions it has. People do anything to get into a home and keep it, even when it's not in their best financial interests in the long run.

[Cassiopeia]

My HELOC is one of the debts I reaffirmed in my BK.

[cj0203]

I was pretty sure she would still be responsible for it; but I told her I'd ask.

I was confused when she asked me, because she really doesn't HAVE any debt besides the house and HELOC. So I have NO idea what she's talking about. She's had the house on the market for over 6m and of course the market sucks so she hasn't had any luck.

I really don't know what she's thinking.

[duciwish]

Hey. Why is she doing bankruptcy if she doesn't really have any debts. If it was me, I'd get out and rent. I see people everyday in the office getting into new homes within one year of discharge. So there is hope after bk. Tell her good luck!

[cj0203]

I wish I knew! I can't really ask her because it's my mother-in-law so I don't want to get too nosy, as I'm sure you understand. She seems to think she'll be able to get a house right away, she's just not in reality right now.

She's one of those people who plays the lottery WAY too much hoping she'll win and everything will be better.

Thanks for the replies. I gave her our atty's info and told her she should go see her sometime soon to get a REAL idea of what she's up against.


Edited to add: She should have sold her house years ago. My father-in-law passed away suddenly about 4 years ago, and since then she's been struggling, especially once the SS stopped on my Sister in law last year when she turned 18. She is currently paying interest only on the mortgage and is STILL going $400+ in the hole every month. I feel for her, I really do because she just wasn't ready to leave the house when she really should have; but now it's completely messing her up. Hopefully she can just find someone to buy the house before Taxes are due this summer (she has NO money put aside for taxes).

[HHM]

This is easy...

In chapter 7, If she want's to keep the house, she has to be current on the HELOC going into the chapter 7, and keep making the payment during and after the BK. If she does not make the payment, the HELOC has the right to foreclose.

[cj0203]

This is easy...

In chapter 7, If she want's to keep the house, she has to be current on the HELOC going into the chapter 7, and keep making the payment during and after the BK. If she does not make the payment, the HELOC has the right to foreclose.

That's what I told her. Thanks!