Hero loan and discharge by bankruptcy?
3 attorney answers
There are at least 2 kinds of debt: Secured and unsecured. HERO loans are secured because you voluntarily signed documents agreeing to having a lien placed against your property. If you don't pay, the lien will survive the discharge of the debt, so later on, the creditor can foreclose on the lien and sell the property to pay off the amount borrowed.
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If there is a lien against the home then as mentioned previously that lien is attached to the home and a bankruptcy alone will not likely remove that lien. Settling the loan amount maybe an option if they agree to release the lien for less than what is owed. If you have other debts like credit cards or medical bills then bankruptcy would likely help you with those types of debts. It is a good idea to schedule a consultation with a bankruptcy lawyer to review your financial circumstances and recommend the best course of action.
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Assuming the HERO loan is a secured obligation and attached as a lien to your home. In this case, a bankruptcy will not immediately eliminate the secured creditor’s ability to collect —- however, bankruptcy law is a little tricky since technically the debt is discharged, yet the secured interest against the home survives your discharge since the secured debt is attached to (aka stuck to) the real property. Technically, in rem liability vs in personam liability.
Probably a better idea to talk with a bankruptcy attorney (or two) directly before deciding what best course of action to take, whether settling the HERO loan and before filing bankruptcy/etc.
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