Heat Pump Repossession?

[nioka]

I will be filing bankruptcy very soon. I thought I had considered all factors but then a friend brought up an interesting question.

I have my heat pump financed through the local electric coop. It is secured via a lien on the house. I will be surrendering the house. I will also be including the heat pump loan on my BK list. It was suggested the the electric coop could repossess the heat pump. I have tired to find something similar on the web but I cannot find a thing.

As banks now tend to be reluctant to foreclose this could become and major issue for me.

Anyone have any experience with something like this?

Thanks

[despritfreya]

What do you mean by a lien on the house? Does the coop have a 2nd position Deed of Trust/mortgage or a UCC1 filing?

Des.

[nioka]

Des,

The house has a primary mortgage. I was told the electric coop would be placing a second lien against the property. Sorry I can't be more descriptive.

[despritfreya]

If it is a lien against the real estate then, if the creditor is not paid, it would have the right to foreclose against the real property. The question becomes, would it? If there is no equity over what is owed to the senior lien holder then probably not.

I would not lose sleep over this but certainly discuss it with your attny. In the mean time, try to find ALL of your loan docs and maybe check with the county recorder to see if a mortgage/lien was placed against the property by the coop.

Des.

[bcohen]

What your electric coop has is a home equity loan, which is secured by a junior lien on the property. As the house is worth less than the first mortgage, this junior lien is not secured by anything. Thus, the holder of this junior lien CANNOT foreclose, unless they pay off the mortgage, which they're not going to do.

Additionally, they cannot repossess the heat pump either. Once installed in an occupied dwelling, the heat pump becomes a fixture and cannot legally be removed for nonpayment. So you do not need to worry about this.

[frogger]

Once installed in an occupied dwelling, the heat pump becomes a fixture and cannot legally be removed for nonpayment. So you do not need to worry about this.

What he said.

[despritfreya]

What he said.

This is why the lender apparently has a mortgage against the home. If OP does not deal with lender it can foreclose when the opportunity is to its advantage. So. . . OP does need to deal with this at some point but that point is probably not now.

Des.

[nioka]

Thanks to everyone. It is great to have such a knowledgeable resource during this difficult time.