If I file for bankruptcy can I include my home equity line of credit in it?
I have a 1st mortgage and home equity line of credit. Can I include the line of credit in the bankruptcy filing and still keep the 1st mortgage and keep the house?
Posted August 2nd, 2010 in Bankruptcy Q And A. Tagged: bankruptcy filing, equity line of credit, home equity line, home equity line of credit, mortgage.
A Chapter 7 will discharge your personal liability on the 2d – they won’t be able to sue you personally for the money. However, it won’t change the lien – they can still foreclose against the property.
If you owe more on the 1st than the property is worth, you may be able to "strip" the lien and eliminate the 2d through a Chapter 13. Consult with an attorney – you probably won’t be able to do this on your own.
Nearly all consumer bankruptcy attorneys offer free consultations. Take advantage of this to find an attorney that can give personal advice based on your particular situation.
August 2nd, 2010 at 9:55 pmYou have several ifs to answer. But first, yes you can list the HELOC in Bankruptcy. Normally, the HELOC is in 2nd position after the lenders of the first mortgage. If the first will allow you to keep the first, and if they allow you to keep the house, then you can do both of those. But, they have to REaffirm this to the court.
August 2nd, 2010 at 9:55 pmI believe that the 2nd position (HELOC) still maintains enough power to force a sale of the house if you are including it in the bankruptcy.
August 2nd, 2010 at 9:55 pmAlthough I’ve only been through a Chapter 13 mortgage (because I had no assets aside from the vehicle I had … which had a lien on it … and was subsequently returned in the bankruptcy filing).
The way I understand it is that your line of credit is a secured loan, if you keep the house you will need to pay off the line of credit.
August 2nd, 2010 at 9:55 pm