QUESTION
Can I file for chapter 7 bankruptcy on a Heloc loan?
Asked on Jul 30th, 2011 on Bankruptcy - California
More details to this question:
I have a first lien Heloc on my Property for 200,250.00. If I Filed Ch 7 Bk will it wipe out the debt with the Bank and make the property free and clear? And the property was sold from Wamu to Jp Chase Mortgage.
11 ANSWERS
Bankruptcy Chapter 7 Attorney serving San Diego, CA
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Law Office of Asaph Abrams
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Chapter 13 lien strip motions are routinely filed to strip wholly unsecured junior liens. Bankruptcy debtors are afforded significant debt relief; yet (alas) they do not get rewarded free homes. Answer does not address all implications of the question, nor is it legal advice to be relied upon.
Answered on Aug 15th, 2011 at 10:10 AM
Debtor's Rights Attorney serving Atlanta, GA
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Theodore N. Stapleton, P.C.
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If you want to keep the property you must reaffirm the debt so it is not affected by the bankruptcy filing. If you surrender the property you can discharge your liability on the equity line. I am happy to discuss your options with you.
Answered on Aug 02nd, 2011 at 11:09 AM
Chapter 7 bankruptcy can eliminate the debt, but you cannot eliminate the right of the lender to take the property if it is not paid.
Answered on Aug 02nd, 2011 at 9:44 AM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Filing chapter 7 you receive a discharge for secured debts on real property. This means you will have no personal obligation if you give up the home. The secured lender retains its security interest, so to keep the property you have to keep making the payments.
Answered on Aug 02nd, 2011 at 9:35 AM
In Chapter 7, only personal liability to pay back a HELOC is extinguished; the lien against the property survives. If the property is underwater to a first mortgage, Chapter 13 can be used to strip the HELOC lien.
Answered on Aug 02nd, 2011 at 9:35 AM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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No, the HELOC (Home Equity Line of Credit) is a secured debt. The bank has a lien in the form of a Deed of Trust or Mortgage to protect (secure) the loan. The lien will not be affected by the bankruptcy case.
Answered on Aug 02nd, 2011 at 7:25 AM
Bankruptcy Attorney serving Herndon, VA
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Maureen O'Malley
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No. It's secured by the house. If you want to leave the house, bankruptcy will discharge the debt.
Answered on Aug 02nd, 2011 at 5:12 AM
Glen Edward Ashman
You can file for bankruptcy on ANY mortgage. HELOC is simply a fancy name for a type of second mortgage. Note that it you file a Chapter 7 on that loan, they will still have their lien, and, unless you pay the loan, expect to get foreclosed on. In some cases you may be able to lien strip a HELOC in a Chapter 13. Discuss that with your lawyer.
Answered on Aug 02nd, 2011 at 5:08 AM
judith runyon
No, as long as you own the house the debt is secured and can't be discharged in a ch. 7. If you no longer own the house and iot was sold through foreclosure hen the remaining debt is unsecured and is discharged in a ch. 7
Answered on Aug 02nd, 2011 at 5:07 AM
Chapter 13 Bankruptcy Attorney serving Beaverton, OR
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Law Offices of Alexzander C. J. Adams, PC
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Generally no. There is a backdoor way to accomplish this, but it is by no means guaranteed. It may be likely in a Chapter 13 if the equities are in line.
Answered on Aug 01st, 2011 at 1:34 PM
Bankruptcy Attorney serving Torrance, CA
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Kalra Law Firm Professional Corporation
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If you want to keep the house and you file chapter 7 Bankruptcy, unfortunately, HELOC (Line of Equity) will continue to remain undischarged in chapter 7 bankruptcy. I would recommend seeking appraisal of the property. If the mortgage loan of 1st Trust Deed holder exceeds the home value, you should consider chapter 13. chapter 13 bankruptcy will allow you to strip the 2nd line of Equity and be paid in chapter 13 plan, as unsecured debts. Its advisable to consult bankruptcy and consider your options, chapter 7 vs. chapter 13.
Answered on Aug 01st, 2011 at 1:16 PM