You are here:

Bankruptcy Law/Should I reaffirm my HELOC?

Advertisement

Expert: - 4/20/2009


Question
Hello. My home is worth approx $310,000 (in CA). I have a 1st w/ Citi at $330,000 and a 2nd w/ Wells Fargo at $125,000. I want to keep the house. I am filing Chapter 7 Bankruptcy. In the BK Paperwork if I "reaffirm" the 1st and "surrender" the HELOC, could Wells Fargo try to Foreclose even if there in not enough to satisfy the 1st mortgage? In this scenario is it possible to get rid of the HELOC in a Chapter 7? If not, would Wells Fargo be motivated to modify my loan and possibly lower the principle? Any suggestions would be appreciated.

Answer
Whether you reaffirm your debt has nothing to do with whether or not Wells Fargo will or won't foreclose.  They can foreclose if you do not make the required contractual payments to them under your promissory note.  Whether they will or not is a decision they will have to make.  You cannot eliminate voluntary liens in a Chapter 7 case.  However, they very well may be interested in modifying your loan and you should explore that option if possible before filing your bankruptcy case (although you can certainly do it after as well, and it can be done as part of a reaffirmation agreement).








http://www.bklaw.com/

Bankruptcy Law

All Answers

Answers by Expert:

Ask Experts

Volunteer

Mark J. Markus- California Bankruptcy Attorney

Expertise

Mark J. Markus is a Los Angeles bankruptcy attorney who has practiced exclusively bankruptcy law in California since 1991 and is rated A+ by the Better Business Bureau and is AV-rated by Martindale-Hubbell. He represents debtors, creditors, and Trustees in Chapter 7, Chapter 11, and Chapter 13 of the bankruptcy code throughout California.

Experience

Visit our California bankruptcy webpage at http://www.bklaw.com for more information on bankruptcy in general and Mark J. Markus in particular. Many questions are answered on the web page (hint, hint).
The Markus webpage also contains more information on

  • Which Chapter to File,
  • business bankruptcy,
  • chapter 7 bankruptcy,
  • chapter 11 bankruptcy,
  • chapter 13 bankruptcy,
  • Do You Need a Lawyer to File Bankruptcy?
  • Frequently Asked Bankruptcy Questions

    Also visit our Los Angeles bankruptcy blog for interesting articles and much more.



    Organizations
    Central District Consumer Bankruptcy Attorneys Association (CDCBAA) Los Angeles County Bar Association (LACBA) Commercial Law & Bankruptcy Section of the Los Angeles County Bar Association Financial Lawyers Conference (FLC) National Association of Consumer Bankruptcy Attorneys (NACBA) Los Angeles Bankruptcy Forum (LABF) American Bankruptcy Institute (ABI) San Fernando Valley Bar Association (SFVBA)

    Publications
    Central District Consumer Bankruptcy Attorneys Association Newsletter September 2007 (Vol. 1, Issue 2)

    Education/Credentials
    J.D., University of Arizona 1990. B.A. Economics, California State University, Northridge 1986. For more details please click here

    Awards and Honors
    AV Rated by Martindale-Hubbell (http://www.martindale.com) A+ Rated by Better Business Bureau

    • ©2012 About.com, a part of The New York Times Company. All rights reserved.