I Got Behind on HELOC Payments and Now Have a Lien Against My House


Dear Steve,

I opened a Home equity line of credit 13yrs ago with Bank of America. Seven years ago the account was closed because I got behind in payments.

Five years ago is was charged off as bad debt. On the credit report, the amount says $42,000 owed and a lien was placed against my home for $49,800.

There is no ongoing collections actions and I have not heard from them in years.

Between my first mortgage Wells Fargo ($56,000) and the HELOC B.O.A ($49-$42?) I owe between $98,000 -$108,000 on a home only worth between $65-$85K. I live in an older neighborhood and the housing prices have been going down, not up.

I’m assuming because of the time that has passed is the reason it is no longer showing up negatively against my credit score?

1. Does Bank of America offer discounted debt settlement? If so, how would I go about doing it?

2. If they do not, then paying over $100k for a house (in a bad neighborhood) that is only worth between $65-$85k, doesn’t make since to me. So would filing Bankruptcy make since in this situation. (I have no other debts)



Dear Joseph,

There is little need to chase you for a debt that has a lien against your home. So I’m not surprised by that. The lien is sitting there earning interest.

A Chapter 13 bankruptcy may make sense in your situation. I strongly suggest you speak with a local bankruptcy attorney who is licensed in your state.

find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

The BOA HELOC lien may be able to be stripped, converted to unsecured debt, and discharged tax-free through a bankruptcy.

There are a lot of technical issues so talking to a local bankruptcy attorney is imperative to get the facts on how this would apply in your specific situation. For example, if you live in Alabama, Florida, or Georgia, you might be able to remove junior liens in Chapter 7 bankruptcy.

See also  We Filed Bankruptcy to Keep Our House But We Are Being Foreclosed On

Come back and update me in the comments with what the local attorney tells you.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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