Between 2005 and 2008, the banking industry offered Home Equity Lines of Credit (HELOC loans) to thousands of homeowners. If you have one coming due, you may have a major problem on your hands.
How does a HELOC work?
The HELOC loans generally only charge monthly interest payments for a certain period of years. When the loan expires, the homeowners owe the full balance. This is also called a balloon payment.Wha
What happens when the HELOC loan expires?
Because many of these loans were for a 10-year period, they are coming due now. Most homeowners are shocked when they get a bill for the full mortgage balance.
Home values from 2008 to Present
Starting in 2008 and 2009, the bottom dropped out for home values; often dropping below the balance owed on the first mortgage. While some home values have increased many have not. The problem with the drop in values is that these HELOCs can't be refinanced with any reputable lender.
One solution that has helped thousands is a Chapter 13.
One of 3 things can happen in a Chapter 13 depending on the value of the home:
1. If the value of the home is less than the balance of the first mortgage, then the HELOC loan can be wiped out and the lien is removed from the property.
2. If there is some equity after deducting the first mortgage balance, the loan can be bifurcated: part paid in full and part wiped out.
3. If there is good equity the HELOC loan can be paid over as much as 5 years.
Additional resources provided by the author
Lawyers who concentrate in Consumer Bankruptcy including Chapter 13 (such as our firm) have always been dedicated to helping homeowners get out of debt and keeping their homes. If you or anyone you know is facing a mortgage company demanding the immediate payment of thousands of dollars contact one of the fine lawyers at AVVO.com
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