If you are one of the homeowners who took out a home equity line of credit (HELOC) during the mid-2000s and are now struggling with interest and principal payments, here are some helpful tips.
If you are struggling with making all your debt obligations, make sure you stay up to date on both your first home mortgage payments, your HELOC, and other secured payments such as car loans. Unsecured creditors such as credit card lenders, or payday loan companies are much more aggressive with calling you the day you are late on a payment, but make sure you take care of the secured lenders first.
Secured lenders are lenders such as the mortgage lender and car loan lender — they are creditors who can foreclose on your home, or repossess your vehicle when you do not make payments on time. Unsecured lenders are lenders who lend money to you but have no collateral associated with the loan. When you are in financial trouble, those lenders can take months, or even years, before they may sue you and garnish your paychecks.
But many people respond to the squeakiest wheel first and pay unsecured creditors before taking care of their home and car loans.
I spend most of my week in our office in the Northland (N Oak Trafficway and Barry Road) and see many clients who live in well-established neighborhoods in the Northland. While I have not seen this trend yet, I have no doubt it will emerge in coming years. Many baby boomers, who have seen their retirement plans go down in value, have made used of HELOCs to tap the equity in their homes for cash flow to supplement their budgets.
If you are concerned about your HELOC loan adjusting in coming years, and are facing other debts like credit card bills and medical bills, schedule a no-pressure free consultation with me at the Northland office to see if a Chapter 7 or Chapter 13 bankruptcy filing may be beneficial for you. If the value of your home has not recovered much since the mortgage crisis, then in some cases, a HELOC may be stripped in a Chapter 13 bankruptcy filing.
Remember we are here to help.
Karen S. Maxcy
Attorney at Law
WM Law, P.C.
OFFICE: (913) 422-0909
FAX: (913) 428-8549