Legal Question in Bankruptcy in Arizona

I have filed Chapter 7 with the hearing in January, 2011. We own a home with a first mortgage and a home equity credit line. The equity in the home is under water with just the first mortgage. The first mortgage is current. If possible we will stay in the home if the equity line is discharged. The equity line is 3 months delinquent. Is it likely that the equity line will be discharged.

Asked on 12/14/10, 10:58 am

2 Answer from Attorneys

Cindy Greene Carmichael & Powell, P.C.

The home equity credit line (HELOC) will be discharged but the lien remains on the home. The lender of the HELOC has the right to "charge off" the amount and not collect. They do not usually do so unless the amount is fairly small. They also have the right to foreclose on the home although they will receive nothing from the sale. They do this because they do not want you to keep the home and not pay them. Unfortunately, you do not know what action they will take until you hear from them.

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Answered on 12/20/10, 7:46 am

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