Will filing chapter 7 wipe out HELOC? 23 Answers as of July 11, 2013

I'm currently doing a loan modification (loan balance $290,000) on my home. I also have HELOC w/ Citibank, trying to get a loan mod from them but getting nowhere. (I have $400k loan balance on the HELOC). My home is worth around 630k, both my mortgage = $690k. What happens if i file a chapter 7?

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Bird & VanDyke, Inc.
Bird & VanDyke, Inc. | David VanDyke
A chapter 7 will only wipe put your personal responsibility on the heloc. The lien will remain against your home. The only way to strip it is to file a ch 13.
Answer Applies to: California
Replied: 7/6/2011
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
Nothing. The HELOC remains as a secured debt. You can't even get rid of it in Chapter 13 because the first mortgage does not exceed the value of the house.
Answer Applies to: California
Replied: 7/5/2011
Breckenridge and Walton
Breckenridge and Walton | Alan D. Walton
You will lose your house if you fail to pay both loans. Even thought your personal liability is eliminated, both lenders have the right to foreclose if they are not paid.
Answer Applies to: Michigan
Replied: 7/5/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
The HELOC will likely remain secured by the property.
Answer Applies to: Washington
Replied: 7/11/2013
Burnham & Associates
Burnham & Associates | Stephanie K. Burnham
No, you will need to speak with an attorney about filing a Chapter 13 and modifying and/or cramming down the loan. This should only be attempted by a Bankruptcy Attorney.
Answer Applies to: New Hampshire
Replied: 7/1/2011
    The Northwest Debt Relief Law Firm
    The Northwest Debt Relief Law Firm | Thomas A McAvity
    While you will be able to eliminate your personal liability on the HELOC, the lender will still be able to foreclose its interest and take your house, it just won't be able to come after you for a deficiency.
    Answer Applies to: Oregon
    Replied: 7/1/2011
    Law Office of Maureen O' Malley
    Law Office of Maureen O' Malley | Maureen O'Malley
    Since the HELOC is secured by your mortgage, Citi could foreclose. They're not likely to, because the first mortgage would get the money, but you'd still owe it. It's possible to strip the 2d in a Chapter 13, but you have to apply when filing and it doesn't get stripped until the 13 is done.
    Answer Applies to: Virginia
    Replied: 7/1/2011
    Koch Laron Law
    Koch Laron Law | Phillip Koch
    There are a few questions that need to be answered prior to answering this properly. Are you behind on any mortgage payments ?? What is the amount of debt you have, income, etc... I would strongly advise you meet with an experience bankruptcy attorney. Our firm is available for a free consult if you would like to make an appt.
    Answer Applies to: California
    Replied: 7/1/2011
    Law Office of J. Thomas Black, P.C.
    Law Office of J. Thomas Black, P.C. | J. Thomas Black
    I don't know if you qualify for Chapter 7, but if you do, it would not affect a valid Home Equity Line of Credit. For that matter, here in Texas, home equity loans and lines of credit are not allowed to impose personal liability on you anyway. All they have is a lien against the property, which is considered a property interest which is not affected by the bankruptcy. A Chapter 7 discharge can discharge your personal liability for your debts. But in the case of the Texas HELOC, you have no personal liability to discharge. If you filed Chapter 7 and were delinquent on the HELOC, the HELOC lender would likely file a Motion for Relief from Stay, to seek Bankruptcy Court permission to start foreclosure. They would have to service or pay the 1st lien if they foreclosed, but given the amount of equity that you have in the property, that would likely happen. Alternatively, the HELOC lender could wait until the Chapter 7 was over, and then start foreclosure without even bothering to file a Motion for Relief from Stay.
    Answer Applies to: Texas
    Replied: 7/1/2011
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    No, you can only strip a second mortgage in a chapter 13.
    Answer Applies to: Michigan
    Replied: 7/1/2011
    The Schreiber Law Firm
    The Schreiber Law Firm | Jeffrey D. Schreiber
    In a Chapter 7, your obligation to pay the debt is discharged, but the lien does not go away. If you do not pay, they have the right to foreclose.
    Answer Applies to: California
    Replied: 7/1/2011
    Sariol Legal Center
    Sariol Legal Center | Frank R. Sariol
    Your personal liability for the HELOC will be wiped out but the lien on the property will remain, especially when you have equity to cover SOME ($300,000 +/-) of the HELOC. If you default on the HELOC, they will foreclose.
    Answer Applies to: California
    Replied: 7/1/2011
    Indianapolis Bankruptcy Law Office of Eric C. Lewis
    Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
    A Chapter 7 only strips a HELOC lien if the first mortgage or any superior liens in total are more than the home is worth (no equity).
    Answer Applies to: Indiana
    Replied: 7/1/2011
    Carballo Law Offices
    Carballo Law Offices | Tony E. Carballo
    The HELOC is a second mortgage. In Chapter 13 you can have the court declare the second mortgage void if there is no equity at all to secure any part of the second mortgage. In your case the second mortgage is partially secured so it cannot be stripped off.
    Answer Applies to: California
    Replied: 7/1/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    A chapter 7 will eliminate your personal liability for secured debts on your real estate. However, the lenders will retain their liens. In effect, therefore, a bankruptcy won't help you.
    Answer Applies to: California
    Replied: 7/1/2011
    Colorado Legal Solutions
    Colorado Legal Solutions | Stephen Harkess
    A Chapter 7 bankruptcy will eliminate your personal liability for a mortgage note. This means that the bank cannot sue you for the note. However, bankruptcy does not remove the deed of trust from the house. This means that if you don't pay the debt, the bank can still foreclose on the property.
    Answer Applies to: Colorado
    Replied: 7/1/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    You cannot strip the second mortgage in a Chapter 7. The only way you could possibly do that is in a Chapter 13, which is a three to five year repayment plan whereby you pay all or a portion of the debt over time. Even then, you have to be able to show that the second is wholly unsecured, that is, that the value of the property is less than the amount owed on the first, making the second wholly unsecured. With the numbers you gave, the house is worth $630K, but the first is only $290K. Therefore, the second (Heloc) is not wholly unsecured, so its not going anywhere anyway. That being the case, you're probably better off just filing a 7 (assuming you have other debt) and wiping that out.
    Answer Applies to: California
    Replied: 7/1/2011
    Law Offices of Michael J. Berger
    Law Offices of Michael J. Berger | Michael J. Berger
    Filing a Chapter 7 does NOT wipe out a HELOC (Home Equity Line of Credit). The HELOC remains secured by the real property and is not affected by the Chapter 7. If you lose the property in foreclosure and then file a chapter 7bankruptcy, any personal liability that you had to repay the HELOC can be discharged in your Chapter 7 bankruptcy.
    Answer Applies to: California
    Replied: 7/1/2011
    Ursula G. Barrios Law
    Ursula G. Barrios Law | Guillermo Machado
    Will not wipe out heloc. Only 13 can strip lien if you want to keep home.
    Answer Applies to: California
    Replied: 7/1/2011
    Law Office of Asaph Abrams
    Law Office of Asaph Abrams | Asaph Abrams
    Chapter 7 will remove personal liability on the loans; however it will not remove the liens, which need to be paid off in order to clear title. In chapter 13, one can remove a junior lien if it has become wholly unsecured; that is not the case in your situation.
    Answer Applies to: California
    Replied: 7/1/2011
    Law Office of J. Scott Logan, LLC
    Law Office of J. Scott Logan, LLC | John Scott Logan
    Chapter 7 will only discharge your personal liability on the loan. The lenders will still retain mortgage interests and can pursue state law foreclosures. You will not be liable for any amounts they do not receive at sale.
    Answer Applies to: Maine
    Replied: 7/1/2011
    Ashman Law Office
    Ashman Law Office | Glen Edward Ashman
    The HELOC remains in a Chapter 7. You can walk from it, but they can foreclose (after the court gives the go-ahead, which they will). The loan mod on one mortgage is useless without modifying the other. You may end up walking from both absent two modifications.
    Answer Applies to: Georgia
    Replied: 7/1/2011
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