I'm in CA....a question about home equity line of credit.

[AllMyFault]

Is it possible to have a HELOC stripped or discharged in a 7?

Thanks

[momofthree]

No. Your personal liability for the debt will be discharged, but the lien remains, so the bank can foreclose once property values increase or your 1st mortgage balance gets low enough to create equity. Some people have had success settling the debt after filing a ch.7 in order to have the lien removed.

You can strip the lien in a ch.13.

[INBK]

Follow-up to the OP's question, we have just filed Chapter 7 and not reaffirming anything...

What about negotiating to reduce the principal owed on the HELOC 2nd after a Chap 7, plus doing a loan mod on the 1st following discharge?

We are underwater on our 1st by approx $20G, and the HELOC 2nd of $50G is of course completely underwater.

We are hoping to do a mod on the 1st, and negotiating with the (different) lender on the 2nd to reduce most of the principal on that, and waiting until after discharge to do it. We'll walk away if we have to, but for what we'd pay in rent, trying to renegotiate, stay and pay is extremely attractive.

Is this a pipe dream, or do-able?

[tcreegan]

Hi all,

Lots of posts on the forum about folks not reaffirming the 2nd, no equity in the 1st, so the second is essentially worthless. Contact 2nd lender and settle for pennies on the dollar.

INBK, the odds for a mod are running about 50/50 according to financial news reports, but a discharge seems to be a good lever to motivate them.

I would go for the mod on the 1st, settle on the 2nd.

Just my 2 cents, probably what it is worth...

Tom in Colo

[INBK]

Thanks, Tom -- Another question for you or anyone: does it matter whether we start to apply for the mod before or after discharge? We have moved heaven & earth to stay close to current on the 1st mortgage prior to filing, and are now just 1 month behind on the first which represents a big catch-up for us.

I take it also, that there's no point even starting to talk about trying to settle the HELOC unless and until we officially get a mod approved?

The HELOC by the way was current as of this month's filing date, but my wife and I are disagreeing about whether to continue paying it going forward. I say we should cease paying the 2nd as of now and attempt to discuss with the HELOC institution later, but she thinks we will blow our shot at staying in the house and is insisting on continuing paying it.

Sorry if these are dumb questions, but any tips or guidance are greatly appreciated. We are relieved to have finally signed and submitted the filing paperwork but are also pretty anxious and wrung out by this whole process.

[tcreegan]

Hi INBK,

Stop paying the 2nd ASAP.....unless you have equity on the 1st the 2nd is worthless.

Doing a mod is anyones guess, depends on lender, phase of the moon, day of the week, you get the idea.....

The common denominators seem to be...it takes a long time and finding a good contact at the right dept at the lender

Good luck w/ this!

Tom in Colo

[StartOver123]

We live in CA and are in this exact situation. First = $350k. 2nd = $250k. House is worth $325k. We tried to file a 13 so we could strip the 2nd but got kicked out and converted to a 7. Discharged in Jan. The 2nd was completely discharged but the lien survived. We modified the first and are now current. Any thoughts now on how to get the 2nd lien removed? Best way to negotiate? How about filing an Order to Show Cause and pry it off? Statute of limitations - can we get rid of the lien after 4 years or more? Thanks.

[newbie2]

We live in CA and are in this exact situation. First = $350k. 2nd = $250k. House is worth $325k. We tried to file a 13 so we could strip the 2nd but got kicked out and converted to a 7. Discharged in Jan. The 2nd was completely discharged but the lien survived. We modified the first and are now current. Any thoughts now on how to get the 2nd lien removed? Best way to negotiate? How about filing an Order to Show Cause and pry it off? Statute of limitations - can we get rid of the lien after 4 years or more? Thanks.

The only way to get the lien removed is to offer them a settlement to remove it. The statute of limitations doesn't apply to secured debt with a lien. You have to remember, the documents you signed are 2 separate instruments: Mortgage and note. The note is gone (the promise to pay) but the mortgage remains (the lien). Since you were discharged in January you are in good shape to pick up the phone and start negotiations with them.

[biotechsolution]

We live in CA and are in this exact situation. First = $350k. 2nd = $250k. House is worth $325k. We tried to file a 13 so we could strip the 2nd but got kicked out and converted to a 7. Discharged in Jan. The 2nd was completely discharged but the lien survived. We modified the first and are now current. Any thoughts now on how to get the 2nd lien removed? Best way to negotiate? How about filing an Order to Show Cause and pry it off? Statute of limitations - can we get rid of the lien after 4 years or more? Thanks.

You best bet is try to settle fairly quickly, say 10% 25K, I'd think they would go for that. Otherwise they will just sell it off to a debt collector and they'll sit on it until the values go up, tacking on interest and penalties the whole time.

[tcreegan]

Hi all,

I have seen settlements in the 5% range, remember the first law of haggling: start low

Tom in Colo