What to Know About HELOC Discharge after Chapter 7 Bankruptcy
September 1, 2021
If you are facing financial hardship, bankruptcy can be an important tool to help you get back on track. With a Chapter 7 bankruptcy, any non-exempt assets are liquidated and used to clear debt. You may be worried about being able to keep your home if you file. Can a home equity line of credit (HELOC) be discharged during bankruptcy? Here is what you need to know about HELOC discharge after Chapter 7 bankruptcy.
HELOCs and Bankruptcy
A bankruptcy is designed to help clear debts, but things can get complicated when it comes to your home. Your residence can be considered exempt, depending on the amount of equity and state and federal homestead exemption laws. This means your home cannot be sold as an asset to pay off unsecured debt. A HELOC loan can be discharged during Chapter 7 bankruptcy, but you can face foreclosure if you are unable to pay your mortgage or loan. An automatic stay can be applied during a Chapter 7 bankruptcy to put collection efforts or foreclosures on hold to buy you time.
HELOC Bankruptcy Options
If you are considering relinquishing your home to get rid of HELOC debt during Chapter 7 Bankruptcy, you may have other options. If there is a foreclosure on your home, the proceeds from the sale of the home can be applied to the mortgage first. The rest is then used to pay off secured loans. Foreclosure may prevent the lender from getting paid or receiving the full value of the HELOC loan during Chapter 7 bankruptcy. You may be able to negotiate with the lender to adjust payment plans that fit your budget so you can keep your home.
Discover Your HELOC Discharge Options During Chapter 7 Bankruptcy
Chapter 7 bankruptcy can be a complex legal matter. Even though your HELOC loan can be discharged, it can be worth the effort to keep the equity in your home as you emerge from the bankruptcy process. You may strongly want to consider consulting with an attorney who specializes in bankruptcy law. George R. Belche, Attorney at Law, can help you discover your HELOC discharge options during a Chapter 7 bankruptcy. Call to schedule a consultation today.
George R. Belche, Attorney at Law
189 West Pike Street, Suite 103
Lawrenceville, GA 30046