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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2815
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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Our current 1st mortgage is more then the value of the home.

Resolved Question:

Our current 1st mortgage is more then the value of the home. Our second mortgage is a HELOC. We are in the middle of filing for BK and were told by one lawyer that the HELOC is now unsecured and can be added to the BK.
However our lawyer said that was not true. Whats the right answer?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
If you are filing for chapter 7 and surrendering , all liens are discharged.
If you are keeping the debt, the debt is still secured, and the lien will survive bankruptcy if you want to keep the home, you will have to pay for it.
IF you are doing a chapter 13, the court can strip off the HELOC if there is no equity whatsoever to attach to, and treat it as wholly unsecured, allowing them a claim for the balance to be paid at the ch13 plan unsecured rate. If there is just 1 dollar of equity, the loan will remain secured however.
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