payments to HELOC on someone else's house

[DimkinB]

Hi all.

This might be a bit confusing but i'll try to explain to the best of my ability.


I live in New York. About 6 months ago my parents in law asked me and my wife to be the co-applicants on their Home Equity Line of Credit application (they didn't have enough income to qualify on their own) The application got approved and now there is a HELOC (from Bank of America) on my parents' in law house with my name on it.I am not on the deed of the house. During the closing, a bank representative suggested we open a new bank account with a direct deposit and set up an automatic payment withdrawal to get an interest rate reduction on the loan. Since my parents in law could not set up a direct deposit, i opted to help them out and opened a joint account (with my wife) and set up a portion of my paycheck ($140 per paycheck twice a month) to be deposited in the new account. Every month I deposited $280 dollars and around $260 of it got withdrawn as automatic payment for the loan each month.

I am now putting all the paper work together to file a chapter 7 bankruptcy (separately from my wife) and am very concerned about this HELOC in general and all the payments I made on it (as automatic withdrawals). I am pretty sure a trustee will question this and ask for explanation and even try to recover the money back from the parents in law. Could I say that the parents in law failed to pay and i had to take over the payments since I am responsible was the loan as well?

Any advice or thoughts are appreciated.

Thank you.

[keepinitreal]

Since the house isn't in your name, I think when you successfully file bankruptcy and are discharged, you'll no longer be responsible for their HELOC, though they will still be responsible.

You should probably call the lender today and tell them you've changed your mind about the auto-payment and no longer wish to do that. Also, send this request in writing.

It sucks, and you probably feel you're letting them down. I had to do something similar on a loan I co-signed for my son's car. Once I'm discharged, only he will be responsible for the loan.

[DimkinB]

Since the house isn't in your name, I think when you successfully file bankruptcy and are discharged, you'll no longer be responsible for their HELOC, though they will still be responsible.

You should probably call the lender today and tell them you've changed your mind about the auto-payment and no longer wish to do that. Also, send this request in writing.

It sucks, and you probably feel you're letting them down. I had to do something similar on a loan I co-signed for my son's car. Once I'm discharged, only he will be responsible for the loan.

Thank you for a fast reply. I stopped the direct deposit to this account. My wife will be taking over the payments. My biggest concern is whether a trustee will question why I was the one to make the payments and see it as a gift or anything else.