If Chapter 13 is filed and a HELOC of $100,000 was included as unsecured, will the lender on the HELOC demand full payment if property is on sale? 13 Answers as of September 29, 2014

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GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
That depends on a lot of things. I would need to review your BK paperwork to answer the question. There simply is not enough information to properly answer your question. Are you filing with a lawyer? If not, pay a lawyer for an hour of his or her time to give you proper guidance.
Answer Applies to: Colorado
Replied: 9/29/2014
Stephens Gourley & Bywater | David A. Stephens
Yes, unless you have an order approving the sale and stripping off the HELOC
Answer Applies to: Nevada
Replied: 9/25/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
The HELOC lienstrip won't be effective until the Chapter 13 case is completed & a discharge is entered. Timing is everything & your question makes no mention of where you are in your Chapter 13 process.
Answer Applies to: Nevada
Replied: 9/25/2014
Steele, George, Schofield & Ramos, LLP
Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
It doesn't matter how you listed the claim. If a junior lien (in this case the HELOC) was secured by a Deed of Trust and that lien is not stripped in the bankruptcy, it is still a valid lien on the property. When you receive your discharge, you will have no personal liability for the debt; however, your property will still be encumbered and the loan would be paid off when you sell or refinance your property. This answer was provided as a public service to a question posed on the Law Q & A website. The answer is based on the information provided and is limited to those facts. Furthermore, the answer is based on California law and their application to bankruptcy law in California. Additional information could change the context of the question and materially change the answer.
Answer Applies to: California
Replied: 9/25/2014
Indianapolis Bankruptcy Law Office of Eric C. Lewis
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
The real question to your issue is understanding the relationship of the HELOC secured or unsecured debt. It doesn't really make sense that it would be unsecured if there was no lien strip involved.
Answer Applies to: Indiana
Replied: 9/25/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You have to continue making monthly payments and provide for any arrears to be paid in a chapter 13
    Answer Applies to: New York
    Replied: 9/25/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Generally if you sell the property during the bankruptcy, the HELOC becomes due in full. You may be able towork out a lower settlement amount. Often they will come down.
    Answer Applies to: Michigan
    Replied: 9/25/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Chapter 7 means you're not longer personally liable on the loan but the lender still has a lien on the property. In my experience, if you want the lender to agree to a short sale, you have to have the property listed for at least 3 months before approaching them.
    Answer Applies to: Ohio
    Replied: 9/24/2014
    Eranthe Law Firm
    Eranthe Law Firm | Cate Eranthe
    A HELOC is a home equity line of credit and is by definition secured. I would expect the lender to object to a designation as unsecured. Is there a lien or Trust Deed on the property? If there isn't enough equity and you filed a motion to value lien then it might be stripped at the end of your case. However, it isn't stripped until the plan is successfully completed. If there is a recorded lien or deed and enough equity to pay the HELOC it will be paid from the proceeds of the sale.
    Answer Applies to: California
    Replied: 9/24/2014
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    Unfortunately I have more questions than answers. First, all this applies to Southern District of California, which is where I practice. If you are in a different area you should consult a local attorney. Was the chapter 13 successfully completed, payments made, discharge received? If no, the second mortgage remains and is due whatever proceeds are obtained through the same up to the amount owed to them. If yes, did the confirmed chapter 13 Plan include a lien strip provision that was approved by the court? If no, the second mortgage remains same answer as above. If yes, did the creditor file a release of the deed of trust with the County Recorder's Office? If no, but answers above are yes and yes then before you attempt a sale follow up with the creditor demanding they file the release. If they won't do it voluntarily you may need to reopen Chapter 13 and have court compel them. If yes to all answers then the second mortgage has been extinguished and they are not entitled to receive anything. Hope this helps.
    Answer Applies to: California
    Replied: 9/24/2014
    D.J. Rausa, Attorney at Law | D.J. Rausa
    Yes. If a Lien Strip was filed and approved, it is contingent on Discharge of the 13. If that has not happened, the the lien is still attached to the property.
    Answer Applies to: California
    Replied: 9/24/2014
    DunlapWeaver PLLC
    DunlapWeaver PLLC | David Ludwig
    Probably. A lien on property generally survives bankruptcy regardless of how a claim is scheduled, and in Virginia, lien stripping requires the filing of an adversary complaint. In order to sell the property free and clear of the HELOC (assuming the lien is fully unsecured and can be stripped), your bankruptcy attorney needs to file an adversary complaint to avoid this lien.
    Answer Applies to: Virginia
    Replied: 9/24/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    yes.... they will.
    Answer Applies to: California
    Replied: 9/24/2014
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