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We have been granted a chapter 7 discharge in Michigan and we are deciding if we will keep the house. The mortgage is $400k, and heloc is $100K, home value is $350k. Mortgage and HELOC are from the same bank. I understand that the HELOC will be discharged but lien will remain. Would the bank ever foreclose on the HELOC if we continued to pay the mortgage. It doesn't seem beneficial for them to do so.
11 ANSWERS
They could foreclose if the secured liens are not being paid on and kept up to date, yes. May not be beneficial, but sometimes banks foreclose or refuse to consider loan modifications even when it makes little financial sense too act in this way. Unfortunately, this still happens far too much.
Answered on Mar 12th, 2012 at 2:34 PM
Bankruptcy Attorney serving Concord, CA
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William Rubendall Attorney at Law
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Your discharge means that you no longer have personal liability on your real estate loans. However, if you are going to keep your property you must pay the loans on the property.
Answered on Mar 12th, 2012 at 1:33 PM
Commercial Bankruptcy Attorney serving Davie, FL
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Law Office of Jeffrey Solomon
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The bank would have a legal right to foreclose. However, since the HELOC is a juniour mortgage, the bank would have to take over the first mortgage, so it would be unlikely to foreclose.
Answered on Mar 08th, 2012 at 10:53 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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The lien associated with the HELOC will remain valid of you "redeem" the house and can - and therefore will be foreclosed - of the bank believes it is worth their while. It is possible to negotiate with the bank.
Answered on Mar 07th, 2012 at 9:31 PM
Business Bankruptcy Attorney serving Raleigh, NC
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J.M. Cook, P.A.
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If you had consulted an atty, you could have stripped the second mortgage in a Chapter 13. However, at this point, if you don't pay on the second mortgage it is a default and the bank can foreclose regardless of whether you are paying the first.
Answered on Mar 07th, 2012 at 12:37 PM
Glen Edward Ashman
Of course they will. When your home value increases in the future, or when you pay down the 1st, you will lose your home. You likely made a big mistake in doing a 7 rather than a 13, where you could have stripped the lien.
Answered on Mar 07th, 2012 at 10:38 AM
Domestic Relations Attorney serving Huntsville, AL
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Ferguson & Ferguson
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No, they won't. It isn't worth their time to pay the mortgage off.
Answered on Mar 07th, 2012 at 10:01 AM
Bankruptcy Attorney serving Hayward, CA
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Carballo Law Offices
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You should have considered a Chapter 13 to strip off the second mortgage if you are keeping the house and making payments on the first mortgage. The second mortgage will foreclose at some point when the property goes up in value and/or you pay down the balance of the first. At some point there will be equity above the first mortgage and then you can expect to hear from the second mortgage. The second mortgage is not going to foreclose so long as the bank holding the second mortgage would not get anything from the foreclosure.
Answered on Mar 07th, 2012 at 9:58 AM
Chapter 7 Bankruptcy Attorney serving Huntington Beach, CA
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Law Offices of Robert Parkinson Taylor
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Probably not, but who knows. Banks don't always do what's logical. In fact, they do the opposite quite a bit.
Answered on Mar 07th, 2012 at 9:57 AM
Bankruptcy Attorney serving Clayton, GA
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Gary C. Harris, P.A.
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If you are 150K upside down, file Chapter 7 and vacate the house. You will never have any equity.
Answered on Mar 06th, 2012 at 7:02 PM
The debts have likely been discharged so the bank cannot go against your accounts if it forecloses. It does depend on what debts you discharged in bankruptcy.
Answered on Mar 06th, 2012 at 7:01 PM