My ex-wife has a HELOC with Chase for $80,000 on a home we co-own with a current mortgage of $150,000 which we have never been late on in 10 years. After I moved out she was out of work for several months and was not able to keep up both payments and has made no payments on the Chase loan since February 09 and it has now gone to collection. I have since moved back in with her (Florida home) to insure payment of the first mortgage. Her primary job brings home $2000/mo and she also has over $20,000 in CC debt. I am in the process of completing the bankruptcy forms for her
1. I am concerned what the implications of the HELOC default are and what actions they can take given BB&T the first mortgage holder has no dispute with us. Current equity in the home is about $30,000.
2. Would you concur on bankruptcy for her and what legal liability would she retain if the house is sold someday with a remaining HELOC deficit?
I could not let pass this request for your help without expressing a deep appreciation for this gift that you have offered so many. I know it must provide you with a deep satisfaction.
Are you saying that even with the HELOC that the house still has $30,000 in equity? If the HELOC was not calculated in that figure, part of the HELOC may be able to be stripped away with a Chapter 13 bankruptcy. It would be a good idea to find a local bankruptcy attorney you like and make an appointment to go in and talk to them about your situation.
The danger of the HELOC deficit is that she could be sued for the debt and/or an interest bearing lien put against the property and the debt will grow until the house is sold or loan paid off.
The reality right now is that the HELOC lender will probably not do much to force the sale of the house unless they feel there is sufficient equity in the home for the house to be foreclosed on and resold. The HELOC lender would have to pay off the first mortgage to get the title to the house in a foreclosure.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.