Can I file for chapter 7 bankruptcy on a Heloc loan? 29 Answers as of January 21, 2013

I have a first lien Heloc on my Property for 200,250.00. If I Filed Ch 7 Bk will it wipe out the debt with the Bank and make the property free and clear? And the property was sold from Wamu to Jp Chase Mortgage.

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Law Office of Asaph Abrams
Law Office of Asaph Abrams | Asaph Abrams
Chapter 13 lien strip motions are routinely filed to strip wholly unsecured junior liens. Bankruptcy debtors are afforded significant debt relief; yet (alas) they do not get rewarded free homes. Answer does not address all implications of the question, nor is it legal advice to be relied upon.
Answer Applies to: California
Replied: 8/15/2011
Heupel Law
Heupel Law | Kevin Heupel
A chapter 7 will discharge the HELOC, meaning you would not have to pay the loan if you let the home go, but the HELOC would still be attached to the property. Thus, if you wanted to keep the property after filing chapter 7, you would still need to pay the HELOC.
Answer Applies to: Colorado
Replied: 8/9/2011
Eric J. Benzer, Attorney at Law
Eric J. Benzer, Attorney at Law | Eric Benzer
Yes
Answer Applies to: Maryland
Replied: 8/6/2011
Eranthe Law Firm
Eranthe Law Firm | Cate Eranthe
Yes you can file for a chapter 7 if you otherwise qualify. No the property will not be free and clear of the loan. I think if you look at the county recorder's office where the property is located you'll see there is a lien for $200,250 recorded on the property. The lien survives the bankruptcy. What is discharged in the bankruptcy is personal liability. This means if the property is foreclosed the lender only takes the proceeds of the sale and cannot come after you individually for money.
Answer Applies to: California
Replied: 8/5/2011
Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
The chapter 7 will discharge your personal obligation to pay the Heloc but there is still a valid lien on your home so the answer to your question is No it will not wipe it out as long as you keep the home. You must file a chapter 13 to strip the lien from your home.
Answer Applies to: California
Replied: 8/3/2011
    Theodore N. Stapleton, PC
    Theodore N. Stapleton, PC | Theodore N. Stapleton
    If you want to keep the property you must reaffirm the debt so it is not affected by the bankruptcy filing. If you surrender the property you can discharge your liability on the equity line. I am happy to discuss your options with you.
    Answer Applies to: Georgia
    Replied: 8/2/2011
    Ray Fisher Law Offices
    Ray Fisher Law Offices | Ray Fisher
    Yes
    Answer Applies to: Texas
    Replied: 8/2/2011
    Breckenridge and Walton
    Breckenridge and Walton | Alan D. Walton
    Chapter 7 bankruptcy can eliminate the debt, but you cannot eliminate the right of the lender to take the property if it is not paid.
    Answer Applies to: Michigan
    Replied: 8/2/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    In Chapter 7, only personal liability to pay back a HELOC is extinguished; the lien against the property survives. If the property is underwater to a first mortgage, Chapter 13 can be used to strip the HELOC lien.
    Answer Applies to: Indiana
    Replied: 8/2/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    Filing chapter 7 you receive a discharge for secured debts on real property. This means you will have no personal obligation if you give up the home. The secured lender retains its security interest, so to keep the property you have to keep making the payments.
    Answer Applies to: California
    Replied: 8/2/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    No, the HELOC (Home Equity Line of Credit) is a secured debt. The bank has a lien in the form of a Deed of Trust or Mortgage to protect (secure) the loan. The lien will not be affected by the bankruptcy case.
    Answer Applies to: California
    Replied: 8/2/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    A bankruptcy does not affect the rights of a secured creditor to be paid, although it will stay collection actions while the stay is in effect. So the HELOC will not be discharged in bankruptcy. It is pretty unusual for a HELOC to be a 1st lien, which indicates that you have paid off the original mortgage on your house. If this is not, in fact, true, then there may be away to discharge the HELOC in a Chapter 13 proceeding if the house is worth less than a mortgage in front of the HELOC. You should consult bankruptcy counsel with the particulars to be sure of your position
    Answer Applies to: California
    Replied: 8/2/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    In a Chapter 7 your obligation to pay the debt is discharged in bankruptcy, but the lien on the property is not removed. In certain circumstances a wholly unsecured second may be removed in a Chapter 13 case.
    Answer Applies to: California
    Replied: 8/2/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    No.
    Answer Applies to: California
    Replied: 8/2/2011
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    If you have a HELOC loan here in Texas, you have no personal liability for the debt anyway. The creditor or their assignees has a lien against the property only. It's what is known as "in rem" liability, or against the property, as opposed to "in persona" or against the person. You can file bankruptcy if you wish, and that would temporarily stop a foreclosure, but after the bankruptcy the HELOC creditor would be able to start foreclosure against the property. Thank you,
    Answer Applies to: Texas
    Replied: 8/2/2011
    R. Steven Chambers PLLC | R. Steven Chambers PLLC
    Bankruptcy will wipe out your personal liability, but the lien will still exist after the bankruptcy and can be collected through foreclosure. Any liability you have for a deficiency remaining after foreclosure will be discharged in the bankruptcy. The fact that JP Morgan Chase took over the loan when Washington Mutual failed is of no consequence to whether you owe the money or they can collect.
    Answer Applies to: Utah
    Replied: 1/21/2013
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    No. It's secured by the house. If you want to leave the house, bankruptcy will discharge the debt.
    Answer Applies to: Virginia
    Replied: 8/2/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    You can file for bankruptcy on ANY mortgage. HELOC is simply a fancy name for a type of second mortgage. Note that it you file a Chapter 7 on that loan, they will still have their lien, and, unless you pay the loan, expect to get foreclosed on. In some cases you may be able to lien strip a HELOC in a Chapter 13. Discuss that with your lawyer.
    Answer Applies to: Georgia
    Replied: 8/2/2011
    The Northwest Debt Relief Law Firm
    The Northwest Debt Relief Law Firm | Thomas A McAvity
    It will not eliminate the lien. You can avoid a wholly unsecured second mortgage in a Chapter 13, but I cannot think of any provision in the bankruptcy code that would enable you to avoid a first in a Chapter 7.
    Answer Applies to: Oregon
    Replied: 8/2/2011
    Kalra Law Firm
    Kalra Law Firm | Madhu Kalra
    If you want to keep the house and you file chapter 7 Bankruptcy, unfortunately, HELOC (Line of Equity) will continue to remain undischarged in chapter 7 bankruptcy. I would recommend seeking appraisal of the property. If the mortgage loan of 1st Trust Deed holder exceeds the home value, you should consider chapter 13. chapter 13 bankruptcy will allow you to strip the 2nd line of Equity and be paid in chapter 13 plan, as unsecured debts. Its advisable to consult bankruptcy and consider your options, chapter 7 vs. chapter 13.
    Answer Applies to: California
    Replied: 8/1/2011
    Financial Relief Law Center
    Financial Relief Law Center | Mark Alonso
    No, it will not, unless you let the property go to foreclosure or otherwise surrender it. A chapter 7 cannot do anything to lien strip a second mortgage and still allow you to hold on to the property. It can only provide a discharge for your unsecured debt, which would include the second mortgage if you no longer owned the property. You may be in a position to work with the second mortgage lender directly and offer them a short payoff or settle the balance of the mortgage. They may be willing to do this if the lien is unsecured and you are already many months past due. Otherwise, only a chapter 13 can lien strip a second mortgage, and that's if you have no equity in the property with your first mortgage. I would recommend speaking with an attorney regarding your specific situation and these options before you make any decisions on how to proceed.
    Answer Applies to: California
    Replied: 8/1/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    The loan will stay. You can only get rid of it in chapter 13.
    Answer Applies to: California
    Replied: 8/2/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    No, as long as you own the house the debt is secured and can't be discharged in a ch. 7. If you no longer own the house and iot was sold through foreclosure hen the remaining debt is unsecured and is discharged in a ch. 7
    Answer Applies to: California
    Replied: 8/2/2011
    Grasso Law Group
    Grasso Law Group | Charles Grasso, Esq.
    Secured debts are not automatically wiped out upon filing a Chapter 7 bankruptcy. If the lien is in first position then you two options: first, you can surrender the property and the debt will be discharged, second, you petition the court to allow you to keep the property but the debt will remain. If you are behind on your payments the bank can eventually foreclose on the property. Depending on your circumstances you may want to file under Chapter 13, you should speak with an attorney to come up with specific options in your case.
    Answer Applies to: California
    Replied: 8/2/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    If that is the only loan on the property, then no, you are not going to wipe out that lien in a Chapter 7 bankruptcy. Actually, in a Chapter 7 bankruptcy, you're not wiping it out whether it be a first or a second mortgage, you can't lien strip in a Chapter 7. Lien stripping is only allowed in a Chapter 13, on a loan which is wholly unsecured. For example, if you owed 400 on a first, 100 on a second, but the property value fell to 350, i.e. less than the first, then you could strip the second, as it is wholly unsecured. But only the second, and only in a 13. Sorry to be the bearer of bad news.
    Answer Applies to: California
    Replied: 8/1/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    No. You can discharge your personal liability on the mortgage, but if you don't continue to pay it, you will lose the house. You don't get to keep things without paying for them - even in bankruptcy.
    Answer Applies to: Colorado
    Replied: 8/1/2011
    Law Offices of Alexzander C. J. Adams, P.C.
    Law Offices of Alexzander C. J. Adams, P.C. | Alexzander Adams
    Generally no. There is a backdoor way to accomplish this, but it is by no means guaranteed. It may be likely in a Chapter 13 if the equities are in line.
    Answer Applies to: Oregon
    Replied: 8/1/2011
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