Collection Agency for Home Equity loan???

[bkinpa]

I had a chap 13 bankruptcy voluntarily discharged (I voluntarily withdrew it after only a few months) in Pennsylvania a year ago. Just prior to that I had a verbal discussion with my Home Equity bank (an interest only 2nd mortgage loan) where they told me that the loan was charged off and any payments made would go toward the principal. Once my bk was discharged I waited for a statement from the bank for the home equity loan. I never receieved one nor did I receive any communication from them. So I did not pay.

Last week out of the blue I received a letter from a collection agency for this loan offering a 60% settlement payment!

That is the last thing I expected. By the way their loan is underwater if they tried to foreclose.

What do you make of this situation? Thank You in advance.

[treehugger1]

Why wasn't your HELOC included in your bankruptcy? You might want to post yoru question to the BK 13 threads.

[bkinpa]

Clarification on discharge added

[2Bshinyandnew]

I had a chap 13 bankruptcy voluntarily discharged (I voluntarily withdrew it after only a few months) in Pennsylvania a year ago. Just prior to that I had a verbal discussion with my Home Equity bank (an interest only 2nd mortgage loan) where they told me that the loan was charged off and any payments made would go toward the principal. Once my bk was discharged I waited for a statement from the bank for the home equity loan. I never receieved one nor did I receive any communication from them. So I did not pay.

Last week out of the blue I received a letter from a collection agency for this loan offering a 60% settlement payment!

That is the last thing I expected. By the way their loan is underwater if they tried to foreclose.

What do you make of this situation? Thank You in advance.

If you withdrew your petition that would mean you did not get a discharge of debts. Is that what you are saying? I'm confused...

[bkinpa]

Yes, that is true. My debts were not discharged. My attorney advised to withdraw it due to correspondence from one of the creditors. Noting that I can always refile. So essentially I have been dealing with CAs again.

[treehugger1]

So your debts were not discharged. It sounds as if you voluntarily withdrew from the BK. If so, you are back to square one. You have no more rights than any other debtor.

Just because the loan was charged-off doesn't mean anything in terms of collections. You still owe on the note, and it seems reasonable that collection attempts have resumed.