Legal Question in Bankruptcy in Illinois

Home Equity Loan - Bankruptcy

My husband and I filed Bankruptcy (Chapter 7) in 2007. We have a Home Equity Loan that was not reaffirmed because the lawyer didn't bring it to our attention until after the fact. As far as we know, the Home Equity Loan was not part of the Bankruptcy. We have been paying the Home Equity Loan every month on time. We are trying to refinance our home, however, the Bank that is holding the Home Equity Loan will not allow us to refinance. Is there something that can be done?

Asked on 3/26/09, 9:01 am

2 Answers from Attorneys

Lesley Hoenig Lesley A. Hoenig, Attorney at Law

Re: Home Equity Loan - Bankruptcy

The previous answer isn't quite right. When you receive a discharge, yes, you are no longer liable, but the lien is still on the house. You do not lose rights in the house unless there has been a foreclosure.

If you want to refinance, you should try getting the loan with a bank other than the bank that holds the HELOC. If the problem is they won't give you a pay off, you might want to have an attorney help you with that. I am not sure why they wouldn't want to give you a payoff amount.

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Answered on 3/26/09, 10:15 pm
Motty Stone Law Offices of Motty Stone

Re: Home Equity Loan - Bankruptcy

Something isn't right with your story. If you filed for Chapter 7, the loan (along with all of your debts) should have been completely discharged just like everything else. If you did not reaffirm, you do not owe on the loan nor do you have rights to the house.

So if the bank still thinks you owe them money, regardless of whether they will let you finance, I think its worth it to have someone look at your paperwork.

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Answered on 3/26/09, 11:06 am

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