Settling A HELOC Debt

[Shmulie]

My parents have a second mortgage (home equity line of credit) on their home my father passed away and I was wondering what would happen to my mother's credit if I did so. This HELOC does not show up on my mother's credit report and when I spoke to them the CS rep said the loan was only in my father's name although I did find my mother's name on the original closing statement.

Any help appreciated.

[Aaaron]

Can you clarify your question?  What are you trying to do?  Not pay it?

[Shmulie]

Can you clarify your question?  What are you trying to do?  Not pay it?

I want to settle it for a lesser amount.

[moko]

I want to settle it for a lesser amount.

you can try and settle, but if they don't agree there will still be a lien on the house. (Maybe some mortgage experts can confirm, but with just a lien they can't foreclose on the house ,but with a regular mortgage they hold the title and can foreclose.

[Aaaron]

you can try and settle, but if they don't agree there will still be a lien on the house. (Maybe some mortgage experts can confirm, but with just a lien they can't foreclose on the house ,but with a regular mortgage they hold the title and can foreclose.

+.5

In some jurisdictions junior lien holders CAN foreclose, or even force a sheriff's sale.  Can't hurt to try to settle it, but they may just file a claim against the decedent's estate anyway, and assuming there are assets there the lender would be protected. 

[Shmulie]

my question is what will happen with my mother's credit as of now the loan is not on her credit report.

also both the mortgage and the HELOC are from citibank
only the mortgage is connected to my mother

[moko]

+.5

In some jurisdictions junior lien holders CAN foreclose, or even force a sheriff's sale.  Can't hurt to try to settle it, but they may just file a claim against the decedent's estate anyway, and assuming there are assets there the lender would be protected.

didn't know that. But if you get it in writing that the debt is settled in full they wouldn't be able to sue the estate.

[Aaaron]

my question is what will happen with my mother's credit as of now the loan is not on her credit report.

also both the mortgage and the HELOC are from citibank
only the mortgage is connected to my mother

You'd have to see the loan docs.  Just because it's not on her CR is not determinative that she's not personally liable.

didn't know that. But if you get it in writing that the debt is settled in full they wouldn't be able to sue the estate.

Of course.  Settled in full is settled in full. 

[coralsnake]

my question is what will happen with my mother's credit as of now the loan is not on her credit report.

also both the mortgage and the HELOC are from citibank
only the mortgage is connected to my mother

Your mother signed some closing  docs because (I'm surmising here) she is on title of the house. Since she is owner of the property a loan cannot be taken against it without her approval (signature). However, in this case, the loan itself (note) was only in your fathers name, meaning ultimately only he is responsible.

Assuming the above is correct, if you settle the debt it should not show up on Moms credit. If, for whatever reason, it does (which is a highly unlikely scenario), you would be able to fight it based on the fact that she was not responsible for the loan.

[Shmulie]

Your mother signed some closing  docs because (I'm surmising here) she is on title of the house. Since she is owner of the property a loan cannot be taken against it without her approval (signature). However, in this case, the loan itself (note) was only in your fathers name, meaning ultimately only he is responsible.

Assuming the above is correct, if you settle the debt it should not show up on Moms credit. If, for whatever reason, it does (which is a highly unlikely scenario), you would be able to fight it based on the fact that she was not responsible for the loan.

thanks thats exactly was I was asking

anyone here have experience settling a debt?
is it better to just hire someone to do it for you or can you do it yourself?

[moko]

thanks thats exactly was I was asking

anyone here have experience settling a debt?
is it better to just hire someone to do it for you or can you do it yourself?

very hard to settle a debt that is current since they have nothing to lose as long as you're paying it. Usually it is much easier to settle a debt in default.

[Shmulie]

I heard that before so what should I do just stop paying it for a few months?

[ckmk47]

very hard to settle a debt that is current since they have nothing to lose as long as you're paying it. Usually it is much easier to settle a debt in default.

Maybe you should start by calling the bank and tell them about the change in circumstances and ask to 'restructure' the loan. Is it that you don't want to pay it, or just can't any more?
BTW: on your Dad - Hamokom Yenachem Eschem B'Soch Shaar Aveilei Tzion V'Yerushalayim.

[Shmulie]

Maybe you should start by calling the bank and tell them about the change in circumstances and ask to 'restructure' the loan. Is it that you don't want to pay it, or just can't any more?

its a very big loan and we really can't afford to pay it off fully I want to try and get most of it forgiven

my father used it for his business and there's no equity in his business to pay it off

[ckmk47]

It would probably be worth sitting with a debt counselor of some kind to hear your options. This forum may not have enough info to do it right.
Good luck.

[Shmulie]

It would probably be worth sitting with a debt counselor of some kind to hear your options. This forum may not have enough info to do it right.
Good luck.

ok anybody know a good one?

[coralsnake]

you can try and settle, but if they don't agree there will still be a lien on the house. (Maybe some mortgage experts can confirm, but with just a lien they can't foreclose on the house ,but with a regular mortgage they hold the title first lien position and can foreclose.

FTFY.

Truth is, IF you stop paying the HELOC and continue paying the first mortgage on time you will be in a much better position to renegotiate the outstanding HELOC balance.

Please dont misconstrue any of this as financial advice.

[ExGingi]

ok anybody know a good one?

Not sure what a debt counselor can do for you.

I have settled my own HELOC, and helped some friends. Each situation is different. Sometimes a HELOC is the only loan.

It depends who the bank is, and many other factors.

Rule number one in debt settlement, if the loan is not seriously delinquent, don't even try. The more delinquent you are, the better the settlement. I've seen settlements range from 0 cents on the dollar (total forgiveness) to 25 cents on the dollar. Each case is different.

[Shmulie]

I have settled my own HELOC, and helped some friends. Each situation is different. Sometimes a HELOC is the only loan.

Also have a primary mortgage

It depends who the bank is, and many other factors.

both the primary mortgage and the HELOC is from CitiBank

Rule number one in debt settlement, if the loan is not seriously delinquent, don't even try.

So maybe I should stop paying the minimum payment now?

[Fan of Dan]

I would definitely talk to a debt counselor. You have nothing to lose.