Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
Was the HELOC discharged in the Bankruptcy?
If not, when was the last payment on this account?
If the trustee abandoned the house, there was probably not enough equity for the lien. This means the lien could have been "avoided" (removed) in the Bankruptcy. If there is a lien on property when a Bankruptcy case is filed, a separate "Lien Avoidance" proceeding must be done to remove the lien. This is because a Bankruptcy - alone - cannot remove a lien, it can only discharge the debt that resulted in the lien.
If it there was no separate Lien Avoidance proceeding in your Bankruptcy, you can have the Bankruptcy case re-opened now for the purpose of filing a motion to have the lien avoided.
Otherwise, considering the fact that you can do this, a settlement offer of $1,000 - $5,000 to the lender to remove the lien would be reasonable.
I think this is what you wanted to know. If not, please let me know.Thank you!
Thank you for accepting my answer!
However, I just realized I gave you an incorrect answer. A HELOC is treated the same way as a second mortgage (even if it is the third loan secured by the house), and a lien for this cannot be avoided in a Chapter 7 Bankruptcy (only in a Chapter 13).
However, because you have no legal obligation to pay the HELOC, a settlement offer of $1,000 - $5,000 is still reasonable, since you do legally have to pay anything, and can file a Chapter 13 at some point in the future (4 years after the Chapter 7).
I apologize for the misinformation, and any confusion it may have caused.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).