Calls regarding discharged home equity line-is this legal?

[newphoenix]

We were discharged in November 2010. We have been paying both our mortgage and home equity line payments on time until this June. My husband paid only a portion of our home equity line payment which was due June 18th. We have received two calls now from U.S. Bank asking when we will be paying the rest of the payment. Actually the first call they were asking what our intention was regarding the loan and tonight they called again and wanted to know if it was our only mortgage (no) and who our first mortgage was with (didn't answer).

Are they allowed to call and ask for payments after discharge?

[lrprn]

Yes, your HEL lender is allowed to call and ask for payments after discharge. Your home equity line is attached to your home, an secured asset. To keep your home after filing, you have to keep paying your first mortgage and your HEL on time. Fall behind on one and the lender has every right to ask you to pay up.

You didn't say if your home is worth less than your first mortgage. If it is, then it's very unlikely that the HEL lender would foreclose on the home. They would get nothing if they did - everything from an auction sale would go to the first mortgage holder. However, if there's sufficient equity in the home that the HEL could get at least part of what you owe them if they took you to court to get the home, that puts you at more risk. Which fits your situation?

[newphoenix]

The house is worth about 360,000. The first mortgage is about 310,000 and the second is about 98,000. I'm not concerned about making the payment. It will be made this week. I was just wondering if they are allowed to call us and be demanding.

Thanks.

[IBroke]

Yes, your HEL lender is allowed to call and ask for payments after discharge.

No, he isn't.

Your home equity line is attached to your home, an secured asset(.....) Fall behind on one and the lender has every right to ask you to pay up.

The lender has the right to get the money, but they DON'T have the right to demand payment by contacting the borrower. So yes, they can seek legal action like foreclosing on the borrower, but demanding payment by contacting the borrower is against the law.

The lender is allowed to ask what the intention of the borrower is in regards to the property in question, but any attempt to collect a payment on a debt (no matter if secured or unsecured) discharged through BK and not reaffirmed is a violation of the permanent injunction.

Lenders usually stop reporting mortgages that are not reaffirmed to the credit-bureaus and either stop sending out monthly statements or put a notation on them, stating that they are for info-purposes only. The reason for that is that both - reporting and the statements - can be considered an attempt to collect and are a court violation due to the reason I just explained.