Loss of home value with HELOC going BK13

[modebt]

We currently have a first and HELOC with Chase, over 90k in unsecured debt and are seriously considering BK13. Recently, we got a letter from Chase on the HELOC stating that they had determined that the home is worth less than what we owe on the first, leaving us negative equity of over $57k. In filing the 13, is there any chance of the HELOC being reduced or eliminated due to the fact that the creditor is now saying that there is no equity and therefore, they have no security? Any input is appreciated.

[justbroke]

We currently have a first and HELOC with Chase, over 90k in unsecured debt and are seriously considering BK13. Recently, we got a letter from Chase on the HELOC stating that they had determined that the home is worth less than what we owe on the first, leaving us negative equity of over $57k. In filing the 13, is there any chance of the HELOC being reduced or eliminated due to the fact that the creditor is now saying that there is no equity and therefore, they have no security? Any input is appreciated.

The HELOC is subject to cram-down if the amount of the FIRST mortgage is fully unsecured (that is the home is worth less than the value of the first mortgage). If you're saying that the HELOC is wholly unsecured (as well as the first mortgage being wholly unsecured) then you may be able to strip the lien.

Your Attorney would file to Strip the Lien (Motion to Determine Secured Status and Motion to Avoid Lien). You will need to have a professional appraisal on the home as well, to submit to the Court.

Lien Stripping is very successful in some jurisdictions. I don't know how well they work outside of Florida.

Even though the lien is stripped, this just makes the HELOC an "unsecured" loan that is subject to discharge. The value of the HELOC would be added with your other unsecured debt. Just make sure you don't go over the maximum for unsecured debt... $336,900.00.