Heloc dilemma? Should I try to settle, or will we start a
massive problem? Went through a
chapter 7 in 2007 because of a dissolved business. The credit unions assets
went to another credit union during the 2008 credit crisis. No contact for 13
years with the new credit union. Now looking at new business ventures and want
to work on issues from the past. Have 215k equity in the house now. Afraid of
stirring up a hornet’s nest owe 50k on the Heloc from 2006 but don't want to
get foreclosed either. Any thoughts on what to do. I'm assuming...
No lawyer could intelligently advise you without first
seeing a title report on your property.
My experience is that clients rarely understand or recall what they
signed over the years, so their understanding as to junior liens such as
HELOC's was wrong as often as not. Some
have ended up with as many as three or four junior mortgage liens, all of which
survive bankruptcy. Even though the personal claims of the lender against them
were normally discharged in past bankruptcies, the property liens don't go away,
until after a foreclosure by a first lien holder, which is the only thing that
can clear the title of all past claims. Unfortunately, at present, your
"equity" might only exist in your imagination. Junior lien claims against property are just
as strong as first mortgages, so if the first is paid off, the junior one
(which might have been the HELOC), moves into first place, and will need to
paid in full with interest before you can ever sell or refinance the property,
just like a first mortgage—there is absolute no difference between them
legally, other than the issue of who recorded with the register of deeds
earlier. Chapter 13's, however, can
sometimes strip away junior liens which exceed the property's value, causing
more junior one to be declared unsecured, so that is what you should investigate.
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