what happends to HELOCs in bankruptcy/foreclosure

[organic potter]

I am thinking of filing bankruptcy due to my credit debt I have accumulated to make my house payments (50K). I am in the process of a loan mod. with first Horizon but its taking forever!
If I file bankruptcy and not include my house on the Chapter 7. I try for a loan mod and say it doesn't work out (nothing seems to be working for anyone with First Horizon), I foreclose, what happens to my HELOC (with Citibank).
I am trying to decide if it would be better to walk away and claim my house on the Chapter 7 or keep trying to keep it. Can you tell me what the ramifications would be for both scenarios?

I owe 400K on my first and 75K on my second (HELOC) both loans are interest only totaling 3k per month. I have heard that you can get a better loan but the payments are higher.
Thank You

[Evan Bedard]

Hi organic potter,

I owe 400K on my first and 75K on my second (HELOC) both loans are interest only totaling 3k per month. I have heard that you can get a better loan but the payments are higher.
Thank You

I would contiue to fight for the modification on your first mortgage, foreclosure is always the last option if there is no other way out. Also with your second mortgage you can try to settle that loan for about 5-10% of the remaining balance. That will help you get rid of a lot of debt..

[organic potter]

so what would happen if I field chapter 7, tried for a loan modification and it doesn't work out. What would my options be then? what would the ramifications be?
thanks for your advise.

[ultimate4799]

Originally Posted by Evan Bedard

Hi organic potter,



I would contiue to fight for the modification on your first mortgage, foreclosure is always the last option if there is no other way out. Also with your second mortgage you can try to settle that loan for about 5-10% of the remaining balance. That will help you get rid of a lot of debt..

Hey Evan. thanks for the tip on settling 2nd loan. Is it better to do this before the actual foreclosure of the 1st lender or it timeframe doesn't matter when you try to settle? Any tips as far as convincing 2nd loan to settly for 5-10%?

[Evan Bedard]

Hey Evan. thanks for the tip on settling 2nd loan. Is it better to do this before the actual foreclosure of the 1st lender or it timeframe doesn't matter when you try to settle? Any tips as far as convincing 2nd loan to settly for 5-10%?

You need to try and accomplish this before foreclosure on your first mortgage. More than likely you will be required to write a short detailed letter explaining that you want to settle the mortgage for X amount of dollars. Call in and let them know you are requesting to settle the mortgage. The process won't be much different then the loan mod process...

[ultimate4799]

Thanks, Evan! Any sample letter for settling 2nd loan? What is best argument to tell them why they should settle for less? If in the letter I say something I'm not sure like I may file BK or in trouble of existing jobs, will they be able to use that against me later on lets say 1st foreclosed and they put me into collection? I appreciate it.

-J