Skip to main content

Can I settle my home equity line of credit on my own or do I need an attorney?

Woodstock, GA |

I am behind on my second mortgage/home equity line of credit. The creditor informed me that my account is now a charge off. I have been making monthly payments for 7 months. The creditor told me my options are to offer a settlement, pay in full, or continue making payments. The charge off status won't change unless it is settled. They told me if I wanted to proceed with a settlement that I needed to submit a settlement offer to them and they will review it. Can I use a standard format debt settlement letter found online and submit it them? Will I be able to keep my house since I am current on my first mortgage? What taxes ramifications will I face? Are they able to pursue a lawsuit in the future? How long will it be on my credit?

+ Read More

Attorney answers 2


Do NOT do what you have been doing. You have many possible options, some likely far better than what you have mentioned. And your main issue should NOT be how long is it on your credit (almost anything you do will be there seven years).

The smart move is to sit down with a lawyer. If you are so upside down that there is no equity in the second mortgage, your best option may be bankruptcy court. In those cases, in both a Chapter 7 and a 13, you can strip the second mortgage and in some cases pay nothing at all to them, and keep the home by paying the first only.

In some cases a settlement could be a smart move, but there are potential consequences that need to be reviewed with a lawyer.

The person best qualified to counsel you will be a bankruptcy or debt settlement lawyer.

If you find this answer helpful, please mark it here on AVVO as helpful. In answering you, I am attempting to communicate general legal information and am not representing you (and am not your lawyer). Do feel free to call me at 404-768-3509 if you wish to discuss actual representation (the phone call also does not retain counsel; that requires an office visit and appropriate paperwork). In that a forum such as this provides me with limited details and doesn't allow me to review details and documents, it is possible that answers here, while meant to be helpful, may in some cases not be complete or accurate, and I highly recommend that you retain legal counsel rather than rely on the answers here. (You can also email my office at . An email also does not retain my office, but can help you get an appointment set if you prefer not to call). I am happy to discuss possible representation with you. Any information in this communication is for discussion purposes only, and is not offered as legal advice. There is no right to rely on the information contained in this communication and no attorney-client relationship is formed. Nothing in my answer should be considered as tax-advice. To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. I am also required to advise you, if your question concerns bankruptcy, that the U.S. Congress has designated Ashman Law Office as a debt relief agency that can help people file bankruptcy.


First of all, the second mortgage company retains the right to foreclose. However, since they are second in line, they cannot get the house unless they pay off the first, which is unlikely. Also, if they do foreclose and try to remove you from the house, you would stop paying the first mortgage, causing them to foreclose and take the house out from under them, which is prudent for them to do. Therefore, the second is just a debt attached to the house that you owe. If you don't work something out, they can sue you or sit around until you pay off the first and they are the only mortgage left. You can work out a way to get caught up or even settle with them. If you do either, you should have an attorney review any agreement to make sure that it is in your best interest and that any settlement involves the release of their lien, as well as the tax ramifications of any settlement, which could be significant depending on the wording of any agreement. The answer to your last few questions will be in the details if any settlement t you come up with.

The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP 53 W. Candler St. Or 718 Oak St. Winder, Ga. 30680 Gainesville, Georgia (770) 307-4899 (770) 538-0555 serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation