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  1. #1
    Join Date
    Sep 2010
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    1

    Default Cosigner for First Mortgage, Not on Equity Line of Credit

    My question involves bankruptcy in the state of: Florida

    I am current on my first mortgage but have defaulted on my equity line of credit that is held with another lender. My house is $24k upside down on the first mortgage alone... I called today and the lender stated that my Equity LOC is "charged off" and they offered me a settlement. Does this mean that the balance is no longer a secured debt?

    I am filing bankruptcy and want to include this LOC in a chapter 7 file. I wish to surrender my home, although my ex-girlfriend intends to retain the proper and continue paying on the first mortgage (she is on the loan for the first mortgage only).

    Can the second lender still foreclose the house against her if I include it in MY chapter 7 bankruptcy, or is she still at risk of foreclosure since the house was originally collateral against the LOC loan?

  2. #2
    Join Date
    Sep 2005
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    Default Re: Cosigner for First Mortgage, Not on Equity Line of Credit

    Quote Quoting smg101
    View Post
    I called today and the lender stated that my Equity LOC is "charged off" and they offered me a settlement. Does this mean that the balance is no longer a secured debt?
    No.
    Quote Quoting smg101
    View Post
    Can the second lender still foreclose the house against her if I include it in MY chapter 7 bankruptcy, or is she still at risk of foreclosure since the house was originally collateral against the LOC loan?
    We have no way of knowing if she will qualify for the mortgage on the basis of her own income and credit. You will also have to read your contract to see what rights you've granted to the creditor in the event of a borrower's bankruptcy.

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