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Bankruptcy Law/$1,000,000 Heloc with Wells Fargo

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Expert: - 1/2/2011


Question
I only have a $1,000,000 Heloc on my home. No other lien in front of it. My home is still worth approx. $1,400,000, so there is equity for sure.
1.I was told that given that I only have a Heloc and not a 1st mortgage, that Wells must file a judicial foreclosure should they want to foreclose on me?(is that true?)
2. What happens if Wells Fargo charges off the debt, does that mean I must pay the full $1 million immediately, or can I still have the opportunity to cure the past due amounts?

3. If Wells charges off the debt and they sue for the $1 million, can they force a sale once they secure a judgment?

I do not want to lose my home, nor lose my rights to any defenses.

4. Can a chapter 13 help? If so, how.

Can you try to answer all 4 questions seperately?

Thanks

Answer

Leon
Dear Steve,

I'm sorry you are facing this scenario. Because I don't know what state you are in, I will answer this based on California law, which is probably why you addressed this to me. Either way, consider this response as just a beginning. You desperately need professional legal help from an experienced BK lawyer, and tax advice.

1. Wells could choose either judicial or non judicial foreclosure. Lenders in this situation almost always opt for non judicial because it is faster, and the borrower has not right of redemption after the foreclosure sale occurs.

2. Under California law you have a right to cure the default by paying it in full until the 5th business day prior to any scheduled foreclosure sale.

3. The fastest way to force a sale will be the non judicial sale route.

4. You might be eligible for a Chapter 13, depending on your overall debt load. Chapter 13 stops the foreclosure process and gives you up to 5 years to bring the loan current provided you resume making regular, normal payments.

I hope you can work yourself out of this problem. Remember, you need local professional legal and tax advice. You need tax advice to find out the tax implications that will come from either a voluntary sale, or those that may come from an involuntary sale.

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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