Sued by Citibank for forclosure, then sued by Citibank on HELOC as a promissory note


LoanSafe Member
Jun 14, 2012
First mortgage 475k, Heloc 200k. Home slightly underwater on total of both notes (low sixes). We were sued by CitiMorgage for foreclosure after being denied mods for a year. Fighting that, attorney advised to stop paying HELOC as chances were good they would not foreclose due to having inferior lien position. He was right for a year but just got served by Citi for the 200k HELOC as a plain vanilla promissory note, not foreclosure. Obviously going to respond to avoid a judgement but what are my options here. Attorney says 6 months left before sale date on first. What are my best bets here, let them get a SJ on the Heloc and then cram it in a BK 7/13? Could I negotiate a settlement for say half on the Heloc and potentially bring it below the sale price of the house at auction or am I screwed. Would like to avoid bk at all costs but wont be burdened by hundreds of k's in debt for life, I have young children. Seems to be alot of nuances here, advice appreciated.


LoanSafe Member
Sep 8, 2011
Assuming such is permitted by law in your state, your lender has decided to sue you under the note. Not unusual when property values are low and you are dealing with a true HELOC. Your attny should have warned you that such could happen if you stopped paying.

Bankruptcy will eliminate your personal obligation (for either loan) but WILL NOT eliminate the liens.

You state that there is equity over what is owed to the first.

Assuming this is your primary residence you CANNOT do a cram down in bk - simply NOT permitted.

If this is not your primary residence a cram down can be done but only in the context of a Chapter 11 or 13. If you file a 13 you better have the financial resources to pay the crammed down value over the life of the Chapter 13 Plan (no more than 5 years). If you file a Chapter 11 you can pay the crammed down value over whatever period you want but you need to be prepared to deal with the complications a Chapter 11 brings.

As to negotiating, someone else will have to chime in but it appears you would be settling a law suit so you would be negotiating with the attorney who represents the lender.


Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
San Diego, California
Welcome and thanks for joining the LoanSafe community Chrisn.

Des has excellent advice! What state are you located in? In most states a secured junior lien holders cannot pursue you personally in lieu of foreclosure.