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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12995
Experience:  B.A.; M.B.A.; J.D.
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Once discharged from Bank of America HELOC in chapter 7, do

Resolved Question:

Once discharged from Bank of America HELOC in chapter 7, do I still have the right to find out if my ex was discharged from it after foreclosure?

I filed for chapter 7, but my ex has not and has lived in another country for over 3 years. Foreclosure will likely occur in about 4 months. The HELOC is in both our names.

The property is valued pretty much the same as the total of the mortgage + HELOC according to Zillow and the county's latest property assessment.

I suspect Bank of America will discharge the loan from both of us and maintain the lien against the property, but I'm not sure. I'm concerned that once I'm discharged from the loan via bankruptcy, I won't have the ability to find out if my ex was fully discharged after foreclosure or if I can get something in writing from them stating she has been discharged.

I need this information in order to know if she has any basis for suing me in case she isn't discharged from the loan. Would the bank be required to provide me this information, even after I've been discharged?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  dylatess replied 1 year ago.

Over 34 years, I have assisted my clients with debt problems having filed more than 32000 Chapter 7 and Chapter 13 Bankruptcy petitions.

Bankruptcy dischages debts that are dischargeable. Likewise, debts that are secured, are dichargeable only to the extent that you, the debtor, cannot be pursued for payment. However, the creditor still has a lien that secures his debt as that is not removed by the bankruptcy. Accordingly, B of A will communiate with you as to their intentions as both of you were on the loan. Finally, so long as this was your primary residence, B of A cannot sue you nor your wife any your wife also has no grounds to sue you.

Customer: replied 1 year ago.

Couldn't BofA go after my ex if the proceeds from foreclosure are not enough to pay out the HELOC?


 


Also, are you saying BofA will communicate their intentions to BOTH of us after foreclosure?

Expert:  dylatess replied 1 year ago.
A HELOC ot second deed of trust on your property is dischaged so long as it was your promary residence. :Likewise, when the property is foreclosed, B of A will issue a 1099 tax statement which will also be sent to the IRS that shows the amount of principal that was discharged. And again, if this is your primary residence, you will not have any tax liability. But if this property was not your primary residence, B of A can sue, your wife, or both. Regardless, B of A will communiate their intentions to all persons on the loan.
Customer: replied 1 year ago.

This was indeed our primary residence when the loan was taken out.


 


Just to clarify...you're saying the BofA cannot sue either of us if the HELOC is not fully paid out after the house has been liquidated by foreclosure because the HELOC was for our primary residence?

Expert:  Phillips Esq. replied 1 year ago.
Thank you for giving me the opportunity to assist you. Kindly use CONTINUE or REPLY button to ask for clarification or follow-up questions.

A different Professional here.

I have several questions:

Does B of A own both the first mortgage and the HELOC?

Did your ex also file for Chapter 7 bankruptcy protection?

Were you ordered by the divorce decree to pay for the mortgage/HELOC?

Customer: replied 1 year ago.

Answers:

 

1) Wells Fargo mortgage, B of A HELOC

 

2) No, she didn't file for bankruptcy. She lives in another country.

 

3) Yes, the divorce decree stipulates that I am responsible for the mortgage and HELOC...which is why I want to ensure she's clear of this so it doesn't come back to haunt me...AND I need to provide proof in writing that she's clear of it.

Expert:  Phillips Esq. replied 1 year ago.

Thank you for the information:

Answers:

1) Wells Fargo mortgage, B of A HELOC

2) No, she didn't file for bankruptcy. She lives in another country.

3) Yes, the divorce decree stipulates that I am responsible for the mortgage and HELOC...which is why I want to ensure she's clear of this so it doesn't come back to haunt me...AND I need to provide proof in writing that she's clear of it.





Questions: Once discharged from Bank of America HELOC in chapter 7, do I still have the right to find out if my ex was discharged from it after foreclosure?



Response 1: First and foremost, B of A is under no legal obligation to discharge the HELOC against your ex after the foreclosure of the first mortgage. The foreclosing lender and the HELOC are not the same. Second, there is no co-debtor protection in a Chapter 7 bankruptcy. So, the Discharge Order in your bankruptcy case only operates to discharge you from your personal obligation on the Note for the first mortgage and the HELOC. It does not operate to discharge your ex's liability on the mortgage and the HELOC.



I filed for chapter 7, but my ex has not and has lived in another country for over 3 years. Foreclosure will likely occur in about 4 months. The HELOC is in both our names.

The property is valued pretty much the same as the total of the mortgage + HELOC according to Zillow and the county's latest property assessment.

I suspect Bank of America will discharge the loan from both of us and maintain the lien against the property, but I'm not sure. I'm concerned that once I'm discharged from the loan via bankruptcy, I won't have the ability to find out if my ex was fully discharged after foreclosure or if I can get something in writing from them stating she has been discharged.




Response 2
: See my previous response. The discharge is only for you and not for your ex. B of A would most likely pursue her for the HELOC after the foreclosure of the first mortgage.



I need this information in order to know if she has any basis for suing me in case she isn't discharged from the loan.



Response 3
: Yes, she does. Even if your obligation under the HELOC are discharged in bankruptcy, your ex can still sue you for violation of the divorce decree. These are two different things: your obligation to the lenders versus your obligation under the divorce decree. While your obligation to the lenders would be discharged in bankruptcy, your obligation under the divorce decree remains.



Would the bank be required to provide me this information, even after I've been discharged?




Response 4: No, the bank is not required to provide the information to you. Also and more importantly, once you have obtained the Bankruptcy Discharge Order, the lender CANNOT send you a notice of deficiency or any collection notice because that would be in violation of Discharge Injunction. See 11 U.S.C. Section 524.

Customer: replied 1 year ago.

There are a number of mitigating factors that make me believe there's a good chance they won't pursue her:


- she lives in another country and it would be very costly to them


- she moves frequently and is very difficult to find


- the house is worth pretty much what's owed, and perhaps slightly more


- the recent government's settlement agreement with the banks has encouraged them to write off second's



Is there any way for me to find out if BofA decided not to pursue my ex, or any information would be available in public records?

Expert:  Phillips Esq. replied 1 year ago.

There are a number of mitigating factors that make me believe there's a good chance they won't pursue her:

- she lives in another country and it would be very costly to them

- she moves frequently and is very difficult to find

- the house is worth pretty much what's owed, and perhaps slightly more

- the recent government's settlement agreement with the banks has encouraged them to write off second's

Is there any way for me to find out if BofA decided not to pursue my ex, or any information would be available in public records?

Response: If B of A has decided not to pursue her, you would receive a 1099-C addressed to both of you because your names are XXXXX XXXXX HELOC. This is a cancellation of debt. For you, the 1099-C would not matter because your debt would have been discharged in bankruptcy. For her, the 1099-C would be used for filling of her income tax returns. 1099-C is the only way that you would know that B of A has decided not to pursue the debt against her. If there is no issuance of 1099-C, then the debt has not be forgiven.

Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12995
Experience: B.A.; M.B.A.; J.D.
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