Question: I work for the bank that holds my home equity line. I do not want to default on it. (It is only a 10k heloc) Can I just continue to pay on it if my mortgage loan is defaulted on?
Answer: You are free to continue to pay on it if you want. However, you have to realize that sooner or later, the bank in first position will foreclose on you. And if there is no equity in the home, more than likely your 2nd will be wiped out, regardless if you made your payments or not. To me, it doesn’t make sense to make payments on the 2nd if you are not making payments on the 1st mortgage. In the end, your bank will still want the $10k that you borrowed, which you can gladly workout some sort of settlement with them until it’s paid off. Offer them payments over 10 years like you agreed on or give them $2000 upfront as a full payoff. They’ll treat it just like any other defaulted loan even if you work there. What you do want to try to avoid is a deficiency judgement. You want to try and get a full satisfaction so they can’t file a judgment against you.
We were living in condo 2015 took a line of credit 2016,requested for refinance denied short sale denied,ending up leaving the condo, foreclosed and everytime we pass i think they have a different owner.we decided to leave bec people are always going in to check the condo while we were still there,now living in an apt.we were in debt settlement after and i ask bout if we need to pay back line of credit from the condo we left he said no.we live in California. now we received a letter for request of default from the home equity,our accountant told us to ignore it, but i m not sure,we cannot pay the amount we owe.can this end up garnishing our salaries?what can we do?
I don’t think I would ignore it completely. Based on what your accountant said, it sounds like they are issuing you a 1099 which counts as income to you. But based on what you said, I don’t think this is the case. It sounds like your lender is in the final stages of getting a judgment against you. If it’s a 1099, your accountant can help you so that you don’t have to pay taxes on that amount. If it’s a judgment, then you should not ignore it. They are looking to collect money from you and if you do nothing, it can eventually lead to wage garnishment.
But before it gets to that point, you can try to workout a settlement with them. If they don’t settle with you, a good attorney can help you settle with them for pennies on the dollar.
You can also develop a payment plan if they agree to it. If none of those options work, or you are just no way able to come up with the money they are asking for, then another option is to file bankruptcy which will wipe out the judgment completely. That would be worst case scenario.