I am a senior and defaulted on my HELOC (home equity line of credit). What are my options to avoid foreclosure?

If you have defaulted on your home line of credit or a reverse mortgage you have several options.

  1. Work out an agreement with the bank.  This may sound complicated, but many times banks have programs to help get you back on your feet after a bout of financial trouble.
  2. Refinance. This is sometimes available, and we even know businesses that will work to purchase your note from your bank to then refinance to you.  Instead of doing a short sale, the business will negotiate with your bank for a short pay off.
  3. Declare bankruptcy to buy time.  A chapter 7 should only be used if you do not have enough equity in your home that would make the chapter 7 bankruptcy trustee want to sell your home.  After the bankruptcy, you always have the choice to reaffirm the debt.
  4. If you are just looking to get caught up on payments, you could file for a chapter 13 bankruptcy and begin to make payments to the chapter 13 bankruptcy trustee to pay off your HELOC or reverse mortgage.
  5. You also always have the option to sell your home if you have equity.  You can cash out and downsize if that makes sense for your situation.

Talk with a Foreclosure Defense attorney near you to go over all of your options.