Non-purchase money HELOC on foreclosed property in Georgia

[gman]

I am being sued on a HELOC on a property that went to foreclosure back in 2008 here in Georgia.

I was just served this month after I filed my BK.

Please understand I am fully aware that assuming my BK is discharged - this will all be a non-issue. I am simply going through the motions in the event that the BK is dismissed and I need to fight this claim.

I read online that a lender in Georgia only has 30 days after a foreclosure to file a claim. Link: http://www.loansafe.org/forum/forecl...nt-window.html

I re-read the Line of Credit Agreement 3x. I am no lawyer (and have filed for BK and cannot afford one) but this appears to be a secured note - not a personal/unsecured one. If so, how can the HELOC lender sue after the property has been sold via foreclosure?

Here are the relevant paragraphs from my Line of Credit Agreement:

WHAT IS YOUR HOME EQUITY LINE OF CREDIT?
"It is a credit arrangement in which we make loans to you by advancing funds ("Advances") from your Credit Account at your discretion, allowing you to repay such Advances and take additional Advances. You promise to agree to repay these Advances, any interest which accrues on them, and all other charges for which you are responsible under the terms of this Agreement."

SECURITY INTEREST - "As a part of this transaction, you are granting us a Mortgage on the property, as further described in the Mortgage which is located at: *my address*________ ("the Property"). All of the terms and conditions of the Mortgage are very important and should be read in conjunction with this Agreement."

NOTE - In the summons - I received no document named the Mortgage. Perhaps they were referring to the Mortgage I took out to purchase the home originally, via a different bank????

In any event - here are my questions:

1. Is it true or not true that in Georgia lenders have by law 30 days to file a claim for deficiency judgment after a foreclosure?

2. Would this even come into play in my case?

3. Does the fact that the Line of Credit Agreement specifically mentions a document called the Mortgage and I have in my possession no such document come into play at all?

4. Is there anything else I should be questioning?

[daytona]

Well there is a "Note" in addition to the "mortgage". They are suing on the "note" that you signed. I can't help you on the GA specific stuff. In any event, one thing I would question is the fact that they are suing you while actively in BK. A BK should stop all collection and legal actions in their tracks and they are in violation of Federal law by pursuing this action...I assume they were "noticed" in your BK filing...if so, they will probably claim they never received it...but a simple call from you or your attorney to "re-notify" them should put an end to things. IMO of course.

[despritfreya]

Not sure why you care since you are in a bk or why you would think your bk will not result in a discharge but. . .

1. Your HELOC (2nd position lien), I will assume, did not foreclose. The 1st foreclosed. It appears that the Ga law you are referencing deals with the lender who forecloses. That lender has 30 days to sue. While I have not read the law, a law that limits the time in which a creditor can sue for a deficiency is not unusual.

2. Your HELOC is nothing more than a promissory note secured by a mortgage. The lender no longer has a lien on the collateral as the 1st took it but it still has the note. It is now an unsecured creditor suing to collect on a loan (promissory note).

Des.

Des.

[treehugger1]

As mentioned, the HELOC note has no collateral tied to it. They are nothing more than an unsecured creditor. I'm almost sure the HELOC lender can sue based on some deficiency. As daytona mentioned, once you file, it will all be addressed in your BK proceeding.

You state "likely to file." Well, either you will, or you won't. If you don't then you can expect all creditors to come at you (along with their hired CA's.) This will include the HELOC lender. They all have the right to use the full power of the law as defined by your state. If this is an issue, then change "likely to file" to "have filed."

[gman]

I have already filed BK - back on Oct 4. I am well aware that in the event the BK is discharged - the Complaint/lawsuit is a non-issue.

I am simply making sure in the highly unlikely event my BK is dismissed, I have my bases covered with this Complaint and corresponding Answer.

Thanks to all who chime in.

[treehugger1]

Thanks for clarifying your BK position. You are correct in that it causes no harm to dot your i's and cross your t's. There is no reason to be blindsided.

[daytona]

Gman;
what was the date on the suit? It appears they might not have been "noticed" yet...or thats what they will claim in any event. All of their collection activitys (litigation) will be stopped dead in its tracks by your petition for BK...things could have gotten crossed in the mail or it took the "left hand" a little time to tell the "right hand" what was going on at the HELOC company and the suit had already been filed.
To answer your question; if your BK gets dismissed then, yes, they can continue with colletion activities. (will either file a new suit or continue with this one, not sure on this exact procedure) The HELOC filing suit will have no bearing on weather your BK gets dismissed though. As previously stated, either you or your attorney need to get in contact with the HELOC co and give them your BK petition number and let them know they are in violation of the automatic stay. Then ask them when you can expect to receive notice that their suit has been withdrawn....

[gman]

Gman;
what was the date on the suit? It appears they might not have been "noticed" yet...or thats what they will claim in any event.

Oct 18

All of their collection activitys (litigation) will be stopped dead in its tracks by your petition for BK...things could have gotten crossed in the mail or it took the "left hand" a little time to tell the "right hand" what was going on at the HELOC company and the suit had already been filed.

The OC (original creditor) was on the matrix. They have farmed out the collections to a national company. The national company then sub-farmed it to a local lawyer. After making a few phone calls, everyone in the process knew about the BK except (supposedly) the local lawyer. [/QUOTE]

To answer your question; if your BK gets dismissed then, yes, they can continue with colletion activities. (will either file a new suit or continue with this one, not sure on this exact procedure) The HELOC filing suit will have no bearing on weather your BK gets dismissed though.

Agreed.

As previously stated, either you or your attorney need to get in contact with the HELOC co and give them your BK petition number and let them know they are in violation of the automatic stay. Then ask them when you can expect to receive notice that their suit has been withdrawn....

Already did. They said that the collection company is in charge - and transferred me to them.

[daytona]

Lo0oks like you have it covered then..."there's always some a-hole who doesn't get the memo"....LOL