HELOC and Bankruptcy
Many homeowners take out a home equity line of credit, called a HELOC, when they need extra money for home improvements or other large expenses. This equity line of credit allows a homeowner the finances to take care of some substantial financial issues, however, every line of credit needs to be paid back at some point, with interest along with the principal payments. If you are struggling with having the financial resources to pay a HELOC back in a timely manner, you may want to understand your legal options regarding your financial future.
It can become difficult to make all the payments you need to make in a timely manner including your first home mortgage payments, all other secured payments such as vehicle loans, as well as your HELOC payments. Unsecured creditors become very aggressive and adversarial when their payments are not made in a timely manner and can resort to harassment in order to obtain compensation from debtors. While unsecured creditors may make threatening phone calls, they should never be your immediate concern. You should always make sure that you focus all of your financial resources on those creditors that have secured collateral regarding your loans such as a house or a vehicle that could become foreclosed upon or repossessed. Never make your decision regarding who to pay first by what creditor is screaming at you the loudest. The unsecured creditors do not have any collateral they can take from you, but mortgage lenders can eventually take your home if you do not pay attention to making their payments.
Why HELOC Loans Become Problematic
In many cases, debtors do not take the time to read the fine print regarding their HELOC loans. In some cases, these loans will have adjusting interest rates that increase over time. In other cases, debtors simply find themselves in unexpected financial crises (such as due to the COVID-19 pandemic) and simply are unable to make their payments. In these cases, HELOC loans become problematic because the essential remedy for lenders is to begin the foreclosure process.
Chapter 13 Bankruptcy and HELOC
While a Chapter 7 bankruptcy may relieve some of your financial burdens, it is important to note that if the value of your home has never recovered from the original mortgage crisis several years ago, you may have the ability to completely remove your payments of a HELOC loan under a Chapter 13 bankruptcy filing. This will largely depend on the facts and circumstances of your specific financial situation and your specific home.
Learn How a Bankruptcy Attorney Can Help You
You may not know what your options are with respect to your financial concerns, specifically related to a HELOC loan. Bankruptcy provides a financial fresh start for anyone, including those with or without HELOC loans. We want to help you with your bankruptcy case, and help you understand how you can get the financial fresh start you deserve. Contact an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton & Kaplan at 561-264-6850 today for a free consultation.