Remove HELOC options help Please

[bkandhappy]

CH 7 awaiting discharge 7/6/20, my HELOC is also included with it. I am keeping the house. 1st and HELOC are both current. House value is 513-575k I owe 373k on the 1st and 60k on the HELOC is with golden 1 and primary is with union bank.

Will the lender close out and remove the HELOC since it will be discharged? I have read where the lenders have done this, can request this or will they just laugh since we have positve equity?

But if i have 117k or so in equity would they just forclose if i were not to pay the HELOC or can I ask them to remove it? What if i just dont pay it, what would they do? but if i take the apprisal value of 513k and minus fees the proceeds would be about 471k,then remove the 1st and that leaves about 100k and that is pleanty above HELOC 60k.

Can i make a lump sum offer to pay off the HELOC? like .10c on the dollar or something?

As far as my 1st should i try and modify it eventough i am current for a lower intrest rate. The current rate is 3.75.

I screwed up and about 2 years ago had the bright idea to take out a HELOC and pay off credit, well 2 years later that was worthless as i declared ch7 and now that unsecured debt is now secured.

I want to try and get rid of the HELOC but keep the house, is there any other options? I cant do a strip because of the positive equity?

[despritfreya]

The Chapter 7 Discharge will not remove any mortgage lien against the property. If you want to keep the property you need to continue to service all mortgages. This includes the HELOC.

You can try to settle with the lender for something less than what is owed but the lender does not have to agree to settle for the release of the lien.

You can always attempt to negotiate a modification. Again, the lender does not have to agree.

If you fail to service the mortgages (or get the lenders to settle) eventually the property will be lost to a foreclosure. This presumes you do not sell the property before that happens.

Des.

[justbroke]

In total agreement with Des. Your home's value completely covers the first and second (HELOC) so you're not even underwater. You're in an area were mortgages are held as a Deed of Trust so think of them as quick foreclosures. You should continue to pay the HELOC unless you otherwise negotiate as Des wrote.

For what it's worth, lien strips are no longer possible under Chapter 7 despite some that made it through (even here in Florida). The Supreme court closed that door. (Pun intended.)

Be careful. The lender could close the HELOC and you may think you're free and clear, but the lien will still be there... collecting interest. They may or may not send your "informational" billing statements. You will need to choose what you want to do and how your end-game looks.

[bkandhappy]

Des and JustBroke,

I will keep the house and will contiune paying on the HELOC no matter what as the end game is to keep this house.

To clarify do you think there is any negative consequences on me trying to offer a settlement on the HELOC the worst they can say is no right? or will this prompt them to do some other action what ever that maybe. If I do try to offer a settlement on the HELOC do i need to wait will discharge and do you know or can you point me to any resources on the proper way to offer a settlement with out a lawyer? Do you know is there such a thing as a loan mod on a HELOC?


Also I am going to attempt to do a loan mod on my 1st, my rate is 3.75 and rates are now lower but i do have the Bk so not sure how that will go but again what do i have to lose and the worst they can say is no. Do either of you know do you have to be late on your payments, but technically the loan in already in Bk so does it even matter as far as the loan mod? Again do you see any negative outcome with attempting a loan mod and i wonder if they did it what the new terms could be and i wonder if having the BK give me a higher chance of being approved for a loan mod?

as always thank you for your wisdom..

[justbroke]

To clarify do you think there is any negative consequences on me trying to offer a settlement on the HELOC the worst they can say is no right? or will this prompt them to do some other action what ever that maybe. If I do try to offer a settlement on the HELOC do i need to wait will discharge and do you know or can you point me to any resources on the proper way to offer a settlement with out a lawyer? Do you know is there such a thing as a loan mod on a HELOC?

No, I don't think there is any negative consequence to settlement of the HELOC.

The lender cannot take any action unless it's available to them under your State's non-bankrutpcy law. That means that you would need to do something to bring you into default of the mortgage/note. The only things that usually qualify for a lender to take such action, like a foreclosure, is when you don't pay or don't maintain hazard insurance. The latter is usually a non-issue as lenders will just get "force-placed" insurance.

Also I am going to attempt to do a loan mod on my 1st, my rate is 3.75 and rates are now lower but i do have the Bk so not sure how that will go but again what do i have to lose and the worst they can say is no. Do either of you know do you have to be late on your payments, but technically the loan in already in Bk so does it even matter as far as the loan mod? Again do you see any negative outcome with attempting a loan mod and i wonder if they did it what the new terms could be and i wonder if having the BK give me a higher chance of being approved for a loan mod?

You do not have to be late in payments. You can always ask for a modification, but that "may" have been easier do inside the bankruptcy with a reaffirmation. I'm not suggesting a reaffirmation -- it's too late anyhow -- but that is a mechanism to entice the lender to lower the rate. The rate you do have, 3.75 APR, is near historic lows, so trying to get into an even lower rate may be for naught.

I would attempt the HELOC settlement negotiation. Realize that if you're successful, they'll likely notify the credit reporting agencies that you settled for less than the balance, which makes it look like a short-sale. That could impact your ability to obtain other mortgage products in the near future.

[bkandhappy]

Thank you JustBroke, I will attempt the HELOC settlement and see what happens. With that said is there anything you can recommend to help with that? What do you think is a realistic number? If i owe $60000 and there is equity do you think i should start at $5000 or is that a laughable amount especially if i have equity more than 60000? and do you know what is the best way to start this process i have no plans to get another mortgage ever so no worries there.

Yes the 3.75 rate is really good and i doubt I can get it lower but i have nothing to lose and i wont default on the loans so all good.

Thank you

[justbroke]

I can't say how they'll negotiate. Some lenders may ask for a financial statement so they can make a determination. Anecdotally, some have started the negotiation at 10% of the balance. A smart lender should run at least an automated valuation (AVM) on the property to decide if they should negotiate at all, but I know nothing about your lender and your specific circumstances.

[bkandhappy]

Golden 1 is my bank that holds it, but my membership will be cancelled because of a credit card i had with them that i went BK on. Ill do some googling on it.

Is it better to wait till DC or before to start it, my DC date is 7/6

[justbroke]

If Golden 1 is a Credit Union (CU) I would tend to think that they will be hardliners. A CU, of course, tries to protect all members from any loss, so I'm going to opine that they will not negotiate. Additionally, if the CU has cross-collateralization, and you didn't have that removed, their could be other issues if you have, say, a car through them.

Additionally, I would not take any actions on credit until my case is closed (and reported as closed).

[bkandhappy]

Thanks Justbroke, No cross- collateraliztion at G1 CU. I had a chapter 7 assets case as i had a few thousand in a savings account for my kids that we could not exempt, i thought we could but nope, so to have my case fully closed it will most likely take a bit longer as they will need to distribute the money in the estate,close but its a small price to pay for the amount of debt I had, I had over 260k in debt and as we all know the MOC can go many ways and I was not about to debate it with the trustee. I am grateful and happy that this is nearly over. Its been a long 12 years of fighting and last year i finally gave up and COVID sealed the deal!