Home equity loans enable homeowners to tap into the equity in their home for just about anything: home repairs, medical expenses, vacations, tuition and more. Low interest rates and the possibility of tax deductible interest payments make home equity lines of credit even more appealing to homeowners in Lane County who are strapped for cash. Unfortunately, many homeowners don’t realize that if they can’t make the payments on a home equity loan or line of credit that their home can be foreclosed upon, even if their first mortgage is paid off.
An elderly couple is facing foreclosure after borrowing a combined $220,000 in home equity loans. Now faced with the possibility of losing their home after missing payments on one of the loans for a number of months, a close family member is trying to help them save it. Filing for Chapter 13 bankruptcy is an option that can be used to stop foreclosure and restructure the debt, allowing the couple to repay the home equity loans over a period of time between 3 and 5 years. Other financial options include consolidating the debt into a single, fixed-rate mortgage, applying for a loan modification, or selling their house.
Financial decisions regarding foreclosure are some of the most emotionally charged. Many people find it hard to leave a home filled with fond memories. If you are faced with overwhelming debt and dealing with the possibility of foreclosure, legal help is available. A bankruptcy attorney can help you determine the best course of action based on your unique financial situation.
Source: foxbusiness.com, “Can’t Pay Off Home Equity Loan — File Bankruptcy?,” Justin Harelik, Nov. 20, 2013