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    #1

    What if??

    Here is a what if question?

    Debt in my name (2 credit cards at 20000 and HELOC at 30000)
    House (1st mortgage is at 78000) which is a joint account.
    House is currently only worth 45-50,000, pretty far under water. Our loan modification on the first is due to be approved on the 1st of next month. (We sent final papers in last week). It lowered our first payment from 790 down to 497. We are currently both unemployed and don't really have no place to move to just yet, but we are constantly looking. We currently have not been able to pay on the credit cards or HELOC for about 5 months now.

    If I were to only file chapter 7, i understand the credit cards would be gone, but what would happen to the 1st mortgage and HELOC?

    Would my name be taken off the 1st mortgage or would I be forced to reaffirm since my wife is still on the loan and didn't file?

    Would the HELOC loan be gone since it is only in my name? I would assume that they wouldn't forclose since the house is so far underwater?

    Or am I overthinking things and both of us should file bk and end up walking from the house? Not knowing where we would go is the problem I am having with walking right at the moment.

    Thanks for your input!!
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    #2
    Technically, you can only lien strip the HELOC in a Chapter 13 filing so as long as you file a Chapter 7 you're responsible for the debt.

    I would not be in too big of a hurry to file bankruptcy. As of right now the creditors don't have anything they can take from you. Wait it out and see if your employment prospects improve.

    If you decide to walk away from the property the foreclosure process takes months, often as many as 18 months or more. With this knowledge, you could conceivably live in the house rent/mortgage payment free for a year and a half before you had to leave. That would help you a lot.
    Well, I did. Every one of 'em. Mostly I remember the last one. The wild finish. A guy standing on a station platform in the rain with a comical look in his face because his insides have been kicked out. -Rick

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      #3
      I would still be responsible for the HELOC even after filling chapter 7? Is that because my wife would still be a person they could go after for the debt (even though the HELOC is only in my name)?

      Sorry if I sound like I'm repeating, but I am trying to make since of this in my head. Thank You.

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        #4
        Originally posted by moo View Post
        I would still be responsible for the HELOC even after filling chapter 7? Is that because my wife would still be a person they could go after for the debt (even though the HELOC is only in my name)?

        Sorry if I sound like I'm repeating, but I am trying to make since of this in my head. Thank You.
        Your HELOC includes a lien on your property. So long as the lien exists the lender has the authority to foreclose. Secured debt is never forgiven. The lienholder always has the right to repossess the property even after a bankruptcy. If you can get the lien stripped then the HELOC becomes unsecured and they have no recourse.
        Well, I did. Every one of 'em. Mostly I remember the last one. The wild finish. A guy standing on a station platform in the rain with a comical look in his face because his insides have been kicked out. -Rick

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