Home Equity Loan Question

[jrfrank]

I need some help with a HELOC with M and T Bank. The house is in PA but I live in NC. The payments for the loan are only $150, but I had some bad financial problems about a year ago, my ex stopped paying for my son's health insurance, and so I had to go after her for child support which took forever, so in the meantime I stopped paying the HELOC and used that money to buy insurance for my son, not expecting it to take 10 months to finally get the child support. The first mortgage had already been modified slightly, and so at about 8 months delinquent I thought I could get some kind of mod on the HELOC, but they said because it's a HELOC they won't modify it. The offered for to spread out the delinquent amount over 12 months and add it to the existing payments, which I agreed to becuase I was now getting the support, plus I had recieved a raise at work and I could afford to pay a double payment for a year. Well they sent the paperwork to the house, which I rent out to a lady, and it took her forever to forward them to me, and by the time I got them the deadline had expired. I called the lawyer's number, but no answer and they never returned my call. The other thing that annoyed me is even though the delinquent amount at the time was like $1,500, they tacked on $600 in fees! So, I tried calling M and T, well they never returned my calls either. SO I just figured I'd save like crazy over a few months and send in a couple big payments to get caught up. I sent in $1,100 2 weeks ago, and intended to send in the other $850 to catch up in May. Well, they sent the check back with a letter stating they now want $2,400 in fees!! On a delinquent amount of $1,900!! I can never get together that amount of money, and I don't know what the heck to do! Any suggestions?!?

[jrfrank]

I just got a notice that a complaint has been filed at the courthouse and I need to reply in 10 days or a judgement will be filed against me. There is no mention of a court date or anything, what does this entail exactly? I wish someone would post some advice, I sure could use it at this point!

[debee]

Is the rental in foreclosure, or going to foreclosure? (I ask because this post is in the "foreclosure" section. Might have gotten more responses in the "collections" section.)

Are you planning to file bk?

[jrfrank]

I have recieved foreclosure notices, so I guess it's in preforclosure? I haven't made a payment on 10 months, and like I said I had an agreement to pay back the delinquent amount but they sent the paperwork to the wrong address and I couldn't get a hold of anyone at the law office or the bank who could do anything about it.

[jrfrank]

Should I consider filing for BK? Will this help the situation? I have enough cash to cover everything to file, and I do have a lot of old CC debt that I haven't paid on in years, but it's been like 6 years and I think all that drops off my record soon anyway, right? I am going to try to call M and T again, but the only person who ever answered the phone there was really mean and basically was insulting me on the phone because I couldn't pay the whole amount, so I don't expect to really get anywhere. The thing is, if they were to foreclose, they wouldn't get anything anyway, the house isn't worth what I owe anymore, plus it's in a flood zone and would be very hard to sell. Not to mention since I am now 9 hours away I haven't been able to keep up with any preventative maintenance, and it needs a lot of work to be marketable.

[debee]

If I'm not mistaken, PA is a judicial foreclosure state and once they foreclose they can come after you for the deficiency (difference between what you owe on the house plus all the foreclosure and lawyer fees and what they get for it at auction). There will also be tax issue caused by the "forgiveness of debt". Bankruptcy takes care of both. Of course, it will also take care of the HELOC. When you add all that up, is the number big enough to warrant bk?

[jrfrank]

My ultimate goal is to be able to keep the house, so my first priority is to stop the foreclosure. If I file BK, will that help with that or is that just going to protect me after the foreclosure? I contacted the loan company again, and they don't want to waive any of the fees, they said I can set up a payment plan but the monthly payment with the fees will be too much for me to afford. If they'd just drop the fees I could afford to pay them back. So confused right now.

[debee]

I understand that you are behind on the HELOC. Is that the only house payment you have? Are you behind on the mortgage as well?

Filing a chapter 7 bankruptcy won't stop foreclosure because the lender will just file a motion to lift the automatic stay in order to foreclose. Generally speaking, you need to be current in order to keep your house through a chapter 7.

You can keep a house when you're behind on payments by filing a chapter 13. But since this is a rental property, unless you move back into it, I don't think you would be able to keep it under these circumstances.

If you're trying to keep an asset, it's probably a good idea to talk to an attorney asap.

[jrfrank]

I understand that you are behind on the HELOC. Is that the only house payment you have? Are you behind on the mortgage as well?

Filing a chapter 7 bankruptcy won't stop foreclosure because the lender will just file a motion to lift the automatic stay in order to foreclose. Generally speaking, you need to be current in order to keep your house through a chapter 7.

You can keep a house when you're behind on payments by filing a chapter 13. But since this is a rental property, unless you move back into it, I don't think you would be able to keep it under these circumstances.

If you're trying to keep an asset, it's probably a good idea to talk to an attorney asap.

I am not behind on the first mortgage, in fact I was able to get it modified slightly. I think my next step is to talk to a BK lawyer. I did speak to a housing counselor, and they really couldn't do much because it's a HELOC, but the guy I talked to said it would be nearly impossible for a 2nd to foreclose without some kind of agreement from the 1st mortgager, but I don't know how correct that is. Basically he said all they could do would be to try and garnish my wages (which would be difficult since I'm in a different state) or put a lien on the house.

[debee]

A second/HELOC can foreclose. They just pay off the first mortgage and keep whatever is left for themselves. Also, once they put a lien on the property it stays (even through bankruptcy) and they have the option of just sitting tight until it appreciates enough to make foreclosing worth their while. Many forum members have been able to buy out their seconds after they file bankruptcy. Basically, they don't make their payment for ages and then offer the lienholder 5-10% of the debt in order to have the lien removed. The lienholder is motivated to accept offers like this on upside-down houses when the debt has been discharged in bk because they don't have a better option (besides waiting and hoping that values go up). It's not impossible to keep a rental property through a chapter 7, but much depends on your equity position and trustee.

I don't know anything about garnishments.

[shark66]

They CAN foreclose. But only if the circumstances are right, debee's post is on target there.

They CAN'T garnish your wages. The only thing they can go after is the collateral which is the house. And in order to that, they'd have to foreclose and the first mortgage would have to be satisfied in full...not a very likely scenario in this day and age.

In order for anyone to garnish anything (apart from IRS) a judgment is required....

Good luck.

[debee]

I think shark66 means the HELOC lender can't garnish you until they have a money judgment against you. A HELOC lender can skip foreclosure and just sue you if the loan is entirely unsecured (if there isn't enough equity in the house to cover their loan).

You can read about it at Nolo's site here: http://www.nolo.com/legal-encycloped...ure-29987.html

I'm not sure why you think they can't garnish your wages in NC if they get a money judgment/writ of execution in PA.

I copied this from the NC Dept of Labor website's fact sheet on garnishments : "If a court from another state issues a valid order under that state’s laws requiring an employer to withhold a North Carolina employee’s wages for payment of a debt, the employer does not violate the North Carolina Wage and Hour Act by obeying that order."

You can read it here: http://www.nclabor.com/wh/fact%20she...rnishments.htm

In other words, if the HELOC lender in PA gets a money judgment & writ of execution, they can garnish your wages in NC. I don't know if they can also put a lien on your current house in NC, levy bank accounts, etc. And I don't know how likely they would be to do it.

Can you copy what it says in the court complaint you've received about the judgment to be entered in ten days? Just leave off the personally identifying info. Did you receive that from the lender or the court?

[shark66]

Here's the garnishment piece: PA doesn't allow wage garnishment. One would have to domesticate the judgment in NC and take it from there...I don't see it happening for a couple of grand.

Good luck to us all.

[debee]

LOL! Thanks, shark! That settles his wages then.

I don't know if they can go after your bank account, house in NC, future assets, etc. I left off your judgment/garnishment questions because I just don't know. Hopefully shark or someone else will chime in on that.

[shark66]

Bank accounts are a free-for-all everywhere apart from Delaware...but depending on the bank that OP is with, they might have to domesticate the judgment for that course of action as well...

I don't know how putting a lien on someone's real property in another state would work, but am quite certain there are hurdles in the way, and that it can't be done overnight.

One last thing: I might very well be biased against M&T since I've had a pretty lousy experience with them once in the past, long before most of the banks showed their true colors...

That being said, I believe that they still expect to be paid "the normal way" and that no adverse court action will be taken at this point.

My $0.02 only...

Good luck.