Refinancing and Charge Offs

[skinny27]

What is the name of your state? MN

My bankruptcy has been discharged and everything went good. Now I am trying to refinance my first mortgage in order to pay off my second (home equity line of credit), and few other personal debts that my wife has. Wells Fargo is who I have my second through and they said that the home equity line of credit is in "charge off status." What exactly does this mean?? I did not think that this type of debt could be charged off. Also, the lender that I am trying to refinance through states they cannot continue until they receive a letter that the charge off on the home equity line of credit has been reversed or was a mistake.

Wells Fargo also said that the reason for the charge was because given how much equity I have left, they did not beleive that they would get their money. But I have 202,000 left on my first, I bought it for 232,000, and it was appraised at 270,000.

Please advise and thank you in advance for any advice.

 

[Ladynred]

Wells Fargo is who I have my second through and they said that the home equity line of credit is in "charge off status." What exactly does this mean?? I did not think that this type of debt could be charged off

Of course they can charge-off those kinds of loans. I would bet that it's Wells Fargo's policy to charge-off debts included in bankruptcy, whether the debt is reaffirmed or not. DID you reaffirm both loans ??

 

[skinny27]

Reply

No, I do not beleive so. Is it possible to reaffirm now..after discharge????

And, what are my responsibilities to that loan. They said that interest is no longer being accured and it is basically just sitting there. I do relaize that if I sell my house I will have to pay that line of credit off, but do I have to pay them every month or at all until then???

Thanks so much.

 

[Ladynred]

No, I do not beleive so. Is it possible to reaffirm now..after discharge????

No, you cannot reaffirm after discharge. The reaffirmation must be done and filed with the court BEFORE your case is discharged.

No reaffirmation = discharge of BOTH your mortgage and the Equity line of credit. Hence the Charge-off by Wells Fargo.

And, what are my responsibilities to that loan. They said that interest is no longer being accured and it is basically just sitting there. I do relaize that if I sell my house I will have to pay that line of credit off, but do I have to pay them every month or at all until then???

Without the reaffirmation, the debt was discharged and you are relieved of your liability for ALL of it. You do NOT have to pay them back AT ALL - unless you want to keep the house, of course. If you want to keep secured property, you have to keep making the payments. If you decide to walk away, they cannot come after you for a dime.

 

[skinny27]

Reply

Could I do this....

Keep making my 1st mortgage payments on time, do not pay my 2nd at all until I sell my house.

Thank you.

 

[SkankCheese]

I believe the 2nd will start foreclosure proceedings on you.

 

[Ladynred]

Yeah.. bad idea, the 2nd would probably forclose. You just can't keep secured property w/o paying for it or you suffer the usual consequences.

 

[skinny27]

Reply

They do not send me statements anymore, how do I know how much I have to pay each month???? And in reality, is the charge off on the 2nd a good thing for me because it is not accurring any interest??? Why would I refinance the 2 mortgages together when the 2nd does not have interest on it anymore because of the charge off???

Thanks so much. You have defintaely been helping.

 

[Ladynred]

how do I know how much I have to pay each month????

Didn't you have a set payment amount ?? If not, CALL them and request an 'informational statement' - they CAN do that at YOUR request. The phone drones might tell you they can't send you any 'bills', and that's true, there can be no demand for payment, but a STATEMENT w/o any demand is possible. I know other lenders to it.

And in reality, is the charge off on the 2nd a good thing for me because it is not accurring any interest???

No, it's not a good thing, but since it wasn't reaffirmed in the BK that would trump the negative of the charge-off. Charge-offs DO continue to accrue interest, the only reason yours isn't is because the debt was discharged in your bankruptcy.

Why would I refinance the 2 mortgages together when the 2nd does not have interest on it anymore because of the charge off???

Because you still have to make the payments to KEEP the house !

 

[SkankCheese]

That's pretty much the bottom line. If you want to keep living in the residence, you still have to pay as if you never filed bankruptcy.
You may not be liable for the debt anymore, but they're not going to let you live there for free.

 

[skinny27]

Reply

Are there any companies that would refinance with a charge of the 2nd?? Just asking for advice. Thanks for any input.