chapter 7 and heloc need help badly!

[dumbquestion]

so i filed for bankruptcy a little while ago. we had our meeting with the trustee on 1-29-10. we have a heloc that my lawyer said "don't worry about it it will go away" since it is a 2nd and we are upside down in the house, but reading some more stuff it looks like that may not be true. i have tried to contact my lawyer but he is not responding can anyone tell me what i should do?

[OhioFiler]

The debt will go away but not the lien.

[dumbquestion]

so what does that mean? after the discharge can the 2nd come back and foreclose. we were planning to try and keep our house but i don't know if that is an option or not?

[BobMango]

As long as the lien is in effect, the holder can pursue foreclosure. Assuming that the house value is less than the balance of the first it may be a while before they want to come after the house. The danger is that if you continue paying on the first and the house value increases, as some point the lien holder of the second will foreclose to get their money.

If you are filing a Chapter 13, stripping the second lien if possible.

[dumbquestion]

it figures. i listened to my lawyer who told me to file chapter 7. is there anything that i can do now?

[justbroke]

Stopping the payment on a 2nd mortgage in a Chapter 7 is very very common these days. While your attorney should have probably explained it to you until you understood, this is a common thing done... especially when you "ride-through" on the first mortgage.

In most cases, the 2nd mortgage holder will not foreclose because the house is just not worth it, but when you go to sell, or if the market improves significantly (10 years?), then you will probably get some trouble with the lienholder at that time.

[dumbquestion]

so can i convert from a chapter 7 to a chapter 13 to get rid of the 2nd heloc all together?

[justbroke]

Trust me... don't go into a Chapter 13 just to do a lien strip. It has to be worth it. You need to evaluate how much underwater you'd still be if you stripped the 2nd. if it's still more than 10%, then you should just stick with the Chapter 7... ride-through the first... and consider it paying rent for the next few years.

You really need to sit down and work all the numbers.... is what I'm saying. You need to find the best financial path... forward.

[dumbquestion]

thanks for the info... what is a lien strip?

[justbroke]

thanks for the info... what is a lien strip?

That's how you lawfully get rid of the 2nd lien in a Bankruptcy. It's also known as a Motion to Determine Secured Status and Avoid Lien.

[albacore44]

I'm currently in Ch-7, 341 on 3/8. I plan to stop paying my 2nd after the 341. That is what I would suggest in your case, but save the money and try to settle for 5-10% in a year or so to get a lein release. Right now there is a lot of confusion in the mortgage industry with the 2nds, you will be operating in uncharted waters, but there is always a chance a government program will come along when round 2 of this recession takes hold

[dumbquestion]

so basicly my lawyer shafted me. if the lien stays then i still can not keep the house unless the 2nd is paid off or settled. my 2nd is 175k 1st is 275k house is only worth 275k. there is nothing to stop the 2nd from foreclosing. i can make the payment on the 1st but not the 2nd. i am only making 1/2 as much money as i was at this time last year.

[albacore44]

so basicly my lawyer shafted me. if the lien stays then i still can not keep the house unless the 2nd is paid off or settled. my 2nd is 175k 1st is 275k house is only worth 275k. there is nothing to stop the 2nd from foreclosing. i can make the payment on the 1st but not the 2nd. i am only making 1/2 as much money as i was at this time last year.

I wouldent go that far. i guarntee you he did not tell you that you could void the Lein on your 2nd in a Ch-7. What he probably told you was you would discharge your responsibility to pay your loans unless you re-affirm. this is a good thing as it allows you to walk away at any time

[dumbquestion]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

[albacore44]

well i don't really want to walk away. i guess i am going to have to try to work out something with the 2nd.

yes, Like a few of us here. might i inquire as to who your 2nd is with ??