Chase told me the HELOC was charged off and sold to a Collection Agency and that the CA now holds the lien. Is the amount owed now unsecured or secured? If it's unsecured (house is still underwater) we should be able to file a CH7, right? But if it is still secured then we'd have to do a CH13.
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It is still secured. The security was created when you signed the Mortgage and Promissory Note. Just because someone else purchases the rights to the Mortgage/Note, that doesn't mean the collateral pledged as security (your home), mysteriously becomes unsecured.
Now, there may be issues with the "assignment" of those rights to collect and enforce the Mortgage and Promissory Note, but that's another issue.
Just because of this sale of the 2nd to a JDB, doesn't necessary mean that you can only file a Chapter 13. If you are underwater on the first, it is highly unlikely the JDB/2nd lienholder is going to foreclose. You could take the chance that they won't, and "Retain and Pay" on your first, in a Chapter 7.Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
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