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I’m Paying a Credit Repair Company to Erase My HELOC Deficiency. – Jim

Written by Steve Rhode

“Dear Steve,

I went thru a divorce in 2009/2010. I moved out of our main home in 2009 and even though I was giving my ex money to pay the house and home equity loan she did not do that. Anyways, the home was short saled in Oct 2010 and the Chase Home equity was charged off in Nov 2010.

Apparently the short sale does not hold me back from buying another house now but maybe the charge-off will. Is that correct?

Anyways, Chase still holds the Home equity Debt and has not turned it over to collections yet. Is that good or bad?

About every 6 months or so Chase mails me a letter and makes an offer for me to settle. First offer about a year ago was 64k, second offer about 6 months ago was 0k, and I just received an offer today to settle for 16k.

Because the divorce wreaked havoc on my financial situation, I am unable to pay their last offer, even if that was the best thing to do. In my situation, what would you advise me to do with the Chase Home equity loan? I currently have a credit repair company working on it so dont know if that will help.

Thank you for your time.


eraser and word bad credit

Dear Jim,

Hiring a credit repair company to handle this is most likely a total waste of time and money. If it appears on your credit report it is a factual item, or so it seems to be by your description.

Even if they were to get it removed temporarily by constantly disputing it all that would happen is that it might be temporarily removed and will most likely be reported again anyway.

The focus here should be two fold; First, focus on dealing with old open issues; Second, make sure you currently have good unsecured credit being reported to all three credit bureaus.

It’s not so much the short sale that will hold you back but the lingering financial liability you have regarding the charge off of the HELOC. It will appear on your credit report for seven years from the time it went delinquent and they can sue you for the deficiency until the statute of limitations expires. Although the ability to sue you and pursue you and go for the deficiency varies by state.

in that case, you’d need to speak with an attorney that is licensed in your state for specific advice about your exact situation.

Please post your responses and follow-up messages to me on this in the comments section below.


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About the author

Steve Rhode

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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