More details to this question:
We may have to file a Chapter 7 but it will not protect us from our HELOC. Our first mortgage is with B of A and the HELOC is with Wells Fargo. Will Wells Fargo garnish our wages? Issue a 1099? Our house is not worth both loans combined. Thanks.
1 ANSWER
R. Christopher Reade
Your HELOC (Home Equity Line of Credit) is a form of line of credit which is commonly used as a second loan for residential real estate. Like any other form of credit used as a second loan, it is usually dischargeable in bankruptcy and subject to the same lien stripping provisions as other loans. If you do not have the HELOC addressed/discharged in a bankruptcy, your HELOC lender could pursue you for a deficiency judgment and seek collection of the same or could issue a 1099 if forgiven outright.
Answered on Oct 21st, 2012 at 3:07 PM