QUESTION
Can a HELOC be discharged with chapter 7 bankruptcy?
Asked on Nov 30th, 2012 on Bankruptcy - Florida
More details to this question:
I was unemployed for 2 years and had to make the choice of paying for credit cards and HELOC or lose the house. Staying in our house was priority. We are current on the first mortgage with the value of the home less than the first mortgage. I want to stay in the house. To make issues more complicated, my husband and I have decided to divorce-uncontested. He is not on the mortgage or the HELOC. We do not share any credit card debt. He is willing to pay for a chapter 7 bankruptcy for me to help in the transition.
12 ANSWERS
Bankruptcy Attorney serving Livonia, MI
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Charles J. Schneider, P.C.
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Yes.
Answered on Apr 14th, 2013 at 6:50 PM
The answer to that question is still up in the air at the moment. The courts are still deciding whether or not that will be possible. That said, there are some judges that will allow you to eliminate a second mortgage or a HELOC. It's not an easy process.
Answered on Dec 04th, 2012 at 12:42 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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You should see a bankruptcy attorney, the HELOC has a lien on the residence which will survive a bankruptcy and very much complicate you plans to keep the house.
Answered on Dec 03rd, 2012 at 5:15 AM
Bankruptcy Attorney serving Plantation, FL
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Moffa & Breuer, PLLC
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Right now the law is in a state of flux regarding HELOCs which are not secured at all. Depending on the outcome of a case currently pending in the Eleventh Circuit Court of Appeals, you might want to consider a Chapter 13 case which would strip the HELOC from the property. This is tricky and a highly experienced bankruptcy attorney should be able to help.
Answered on Dec 02nd, 2012 at 10:22 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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A chapter 7 would discharge the debtor's obligation to pay the debt, but it does not remove the lien on the real property. You might accomplish this in a chapter 13, but it depends on the facts. Please understand that filing for bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Answered on Dec 02nd, 2012 at 9:51 PM
Business Litigation Attorney serving Orange, CA
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Law Offices of Frank Granato
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Yes. The debt can be discharged in bankruptcy.
Answered on Dec 02nd, 2012 at 9:40 PM
You cannot discharge a HELOC through ch. 7. The only way to do it is through ch. 13, where you need make some payments to unsecured creditors through an approved plan. You will need to sit down with a bankruptcy attorney to discuss details of what a ch 13 bankruptcy entails and to evaluate your circumstances to see if that is the best course of action for you.
Answered on Dec 02nd, 2012 at 7:30 PM
The HELOC can be discharged by a Chapter 7 bankruptcy but don't expect the lien or 2nd mortgage associated with this loan to disappear with your discharge. In order to remove the lien, you would have to pursue a Chapter 13 bankruptcy with a lien strip. Another option could be to discharge the debt in the Chapter 7 and see if the lien can be settled down the road with a lump sum payment. Completing a Chapter 13 lienstrip would be a certain way to eliminate the HELOC lien, the other option involves risk as there is no guarantee of results. You will want to consider what you can afford and how much risk you feel comfortable taking.
Answered on Dec 02nd, 2012 at 7:28 PM
Daniel James Wilson
Chapter 7 will not help with the HELOC. It is a secured debt, the equivalent of a 2nd mortgage. You should consider a Ch 13. If your home is worth less than the balance on your 1st mortgage the HELOC can be stripped and treated as unsecured debt in a Ch 13, but not in a Ch 7. See an experienced Ch 13 bankruptcy lawyer.
Answered on Nov 30th, 2012 at 4:32 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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You should do a 13 so you can discharge/strip off the 2nd mtg.
Answered on Nov 30th, 2012 at 4:32 PM
Bankruptcy Law Business Attorney serving Asheville, NC
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Pitts, Hay & Hugenschmidt, PA
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To "strip" the HELOC, you will probably have to file Chapter 13.
Answered on Nov 30th, 2012 at 4:31 PM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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You must act quickly and get to a bankruptcy attorney in your area. You may indeed be able to get rid of the HELOC.
Answered on Nov 30th, 2012 at 4:31 PM