How do I settle a HSBC HELOC Mortgage?

[sritha]

I took a heloc(2nd) from hsbc and stopped paying it since march 2010. My first loan is also with HSBC (since 2005) and i am current on that payment. The loan shows zero balance on my 2nd mortgage on HSBC's web site.

I am getting continous calls from a collection agency. 1st loan is 162000 and 2nd is 70000. House price currently is 158000. Please advice, if i start to settle my second with the collection agency since it is already upside down.

Any replies are appreciated.

[Maurice Bedard]

Welcome to the forum.

You can possibly claim bankruptcy if you qualify or settle it for pennies on the dollar like many forum members have done. My best advice is to study these thread on the forum by our moderator titled, Strategy for Settling Your 2nd .

There is tons of info and tips on settling a 2nd such as;

It’s irrelevant whether your lender charges off and/or sells your 2nd/HELOC to a debt buyer or not. Makes no difference whatsoever, so ignore it. If, in fact, the debt is sold to a new entity, and you receive a letter from the new owner, DO NOT bother sending a debt validation letter. It accomplishes nothing for you, does not affect your legal standing, and is generally a waste of time and effort. Plus, it signals to the debt owner that they have the correct address, and that you, as a debtor, are concerned, stressed, and naive enough to send it. BTW, a new debt owner is required, under the provisions of the FDCPA, to send a letter to the debtor advising them, among other things, of their right to have the debt validated. Means nothing, so forget about it.

and here is info on bankruptcy, Does bankruptcy discharge a 2nd mortgage? | LoanSafe.

Here is some of the advice;

A Chapter 13 bankruptcy may have the effect of discharging a second mortgage. Liens may be stripped off from the asset of the debtor if there is insufficient equity in the asset after the senior liens, such as the first mortgage, have been deducted.

Please note that you would have to qualify for this type of bankruptcy and the removal of the 2nd mortgage can only be applied within the context of debt reorganization. Chapter 13 is designed for people with regular income to pay back a portion of their debts over time.


This is supported by the Bankruptcy Code, specifically Section 506 in which it is declared that a lien can only be considered to be secured based on the value of the collateral. Therefore, for the amount that can no longer be covered by the equity of the home, the second mortgage is considered to be unsecured.


Section 11 of USC 1322 may possibly allow the homeowner, under certain situations, to waive the 2nd mortgage if he has filed Chapter 13 bankruptcy. The condition is that the price of your home has declined to a level that is lower than the value for the first mortgage.

[sritha]

Thanks Bedad. Would like to stay in the house since i am current on my first, shall i start answering the collection agency calls or call the HSBC directly. what to do next?
Please advice. Great site.

[Evan Bedard]

Thanks Bedad. Would like to stay in the house since i am current on my first, shall i start answering the collection agency calls or call the HSBC directly. what to do next?
Please advice. Great site.

Since the account was charged off and transferred to a collection agency you will need to work with them on the possibility of a settlement. This debt will not disappear even though it has been charged off so you will need to work out a settlement at some point. You can start negotiating anytime with the CA and by following the strategies listed in the link below you should be able to end up settling the account for as little as 5-20 percent of the balance..

[TomEason]

sritha

Thanks for your posts.

I recommend you go to the thread Moe suggested and read the settlement guide at post #1.

Per that guide, I recommend you have no further communication with either HSBC or the CA.

[sritha]

Thanks Tom. For how long do i need to wait. It is almost 2 years since i stopped my payments.

[TomEason]

sritha

Thanks for your post.

I recommend you not think of waiting as something you must do. If you have no compelling reason to settle now, you might be very patient. After all, doing nothing while waiting is easy. I personally excel at doing nothing, LOL.

A settlement may take over two years, but unless you're in an extraordinary RE market you'll no doubt have a very long time in which to settle. In the meantime, think of all the money you've bee saving!

Good luck to you.