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I need a plan... My husband and I received our Chapter 7 bankruptcy discharge in January. The possibility of divorce is likely. We owe $250K on the house and we have a $50K HELOC. The county has the house assessed at $242K.
We are current on payments; however, finances are very tight and we are currently paying interest only on the HELOC, we are soon to be faced with P&I payments which we will not be able to afford. If we let the house go into foreclosure, what happens to the HELOC? Would a short sale be a better alternative? What happens to the HELOC in a foreclosure or short sale?We continued to make payments, but did not "reaffirm". As I understand your response, we are no longer obligated to the debts; therefore, the banks (inc. the HELOC) cannot sue us after a foreclosure. It would seem, then, that a short sale after bankruptcy would not make sense since our credit is already ruined.
Divorce Dividing debts in a divorce Divorce and bankruptcy Divorce and foreclosure Bankruptcy Chapter 7 bankruptcy Credit score Credit Debt Bankruptcy and debt Residential property Real estate finances Foreclosure Short sales Real estate and bankruptcy Real estate Homeowners' association Deficiency judgment