topic Re: Chapter 13 & HELOC in Bankruptcy

Chapter 13 & HELOC

Anonymous — Fri, 31 Jan 2020 03:12:44 GMT

Making 45k Annually
House Valued @ 525k
Balance: 500k HELOC (Defaulted Sept 2016)
2nd Mortgage 70k (Current)

There is nothing else of note to include debt wise maybe some charge offs from 2016 30k at maximum. This is not for me FYI, but trying to see if there’s anyway out of this other than foreclosure. Not interested in a Chapter 7 we would be better off listing it and selling it on our own. We would get a lot more for it if we could update it as the home is dated however we won’t put money into anything until it is safely away from the wolves.

Is it possible to shed alot of the debt and come out the other side with the house? My grandmother is 87 and wishes to stay in her home. When they accelerated the HELOC the payment went from 890 to 2250 or so it made it completely non functional.

Re: Chapter 13 & HELOC

despritfreya — Fri, 31 Jan 2020 11:51:13 GMT

@Anonymous wrote:
Making 45k Annually
House Valued @ 525k
Balance: 500k HELOC (Defaulted Sept 2016)
2nd Mortgage 70k (Current)

. . .trying to see if there’s anyway out of this other than foreclosure. Not interested in a Chapter 7 we would be better off listing it and selling it on our own. . . Is it possible to shed a lot of the debt and come out the other side with the house?. . . they accelerated the HELOC the payment went from 890 to 2250 or so it made it completely non functional.

Not sure what you mean by your post.

1. Selling is not practical if $570k is owed and the home is only worth $525k - other than a short sale which may or may not be approved by the lender who is going to be stiffed.

2. Chapter 13 is not going to “shed” any of the mortgage debt if this is the debtor’s primary residence.

Des.

Re: Chapter 13 & HELOC

Shooting-For-800 — Fri, 31 Jan 2020 13:30:15 GMT

I would get a real appraisal so you know where you actually stand.

Can you buy into the house and refi?

It could be refi into 75% INT / 25% INT so your investment is secured.

Re: Chapter 13 & HELOC

Anonymous — Fri, 31 Jan 2020 15:10:42 GMT

The banks appraisal is way off there comparing it to houses half the size with half the acreage and two out of the three aren’t even on the water while this house is. But we haven’t told them because we don’t want them to know there’s equity and give them incentive to auction it. That was basically what I was trying to figure out if there was a way to shed it, which the answer to that is no. Thanks for letting me know. Now am I correct that it will freeze the foreclosure process and give us more time if the bank intends to take it? We have been re submitting loss mitigation packages for years and by law they have to take the packages and re-run the numbers so it’s bought us some time but we’ve got a court date coming up so things are coming to a head

Re: Chapter 13 & HELOC

Anonymous — Fri, 31 Jan 2020 15:13:24 GMT

Can you clarify what you mean by buy in? The current HELOC is in default wouldn't that be like buying a boat with a hole in it? I will bring up the idea of an appraisal but the houses on the street are going for 800k+ we know roughly what it’s worth

Re: Chapter 13 & HELOC

despritfreya — Fri, 31 Jan 2020 16:39:09 GMT

@Anonymous wrote:
Now am I correct that it will freeze the foreclosure process and give us more time if the bank intends to take it?

The filing of bankruptcy will postpone the loss of the home by about 90 days (give or take 30 to 60 days in either direction) depending upon how quickly the lender obtains relief from the automatic stay and/or the case gets dismissed.

Des.

Re: Chapter 13 & HELOC

Shooting-For-800 — Fri, 31 Jan 2020 21:56:24 GMT

@Anonymous wrote:
Can you clarify what you mean by buy in? The current HELOC is in default wouldn't that be like buying a boat with a hole in it? I will bring up the idea of an appraisal but the houses on the street are going for 800k+ we know roughly what it’s worth

You can hire a real estate appraiser to work for you without the bank even knowing.

It will cost you $200-$500 and if done properly, will provide you with real world numbers.

As far as buying in, if you refi she would no longer be in default.

The new mortgage (fixed for 30 years ideally) would pay off EVERYTHING that is owed on the house now.

She (and you) would get a fresh start.

If the house is worth dramatically more than she owes, then obviously you should keep it out of foreclosure.

If it goes into foreclosure, they will auction it, asses fees, and you will get lower than market value.

If you (or another family member) cannot "buy into" the house, find an attorney to fight the foreclosure.

Get the appraisal and sell the house for 10-15% below appraisal before foreclosure.

A decent attorney should provide you at least 90 days of breathing room.

Another thought is to try and negotiate a payment plan to get caught up on the mortgage.

Obviously, this would involve you or family member(s) helping her financially.

Again, the deed can be changed so that you are buying partial ownership of the property so that there are no arguments in the future of who owes what to whom.

Worst case, if she can get approved for Ch13, her house gets paid first and cannot be forclosed on as long as the Ch13 payments are current.

Re: Chapter 13 & HELOC

Shooting-For-800 — Fri, 31 Jan 2020 22:10:39 GMT

If you really think the house is worth $200k+ more than she owes, you should gather the entire family up and see who wants to help/invest.

3 family members could buy the house with a new mortgage for $200k each and let her live there for $2k per month or whatever. This would provide instant equity and solve her issues. You could even give her 25% of the house or whatever if it matters without her being on the new mortgage.

You do a Tenants of the Entirety if your state allows it. Basically, the estate automatically goes to each owner as the other owners die bypassing probate. So if 3 investors plus grandma own the house, when grandma dies, each investor gets 1/3 of grandma's share.

She gets to stay in the house, family gets a good investments with instant equity and when she passes, you sell the house when you want and everyone wins.