Facing foreclosure, and have an open credit line?
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Answer:
Wow, a lot of condescending comments on this question. I'll try to do a little better.
If the bank didn't want you to spend the $30,000 as fast as possible, they shouldn't have given you a credit line for it. They gave you an open credit line, which means they knew you could use it to purchase whatever you wanted.
Now, if the credit line is behind in payments, you'll have a tough time drawing on it. They may have frozen the account until you are caught up again, which means you wouldn't be able to purchase that new car.
But if the open line is fine and you're just behind on the first mortgage, you can do whatever you want with the credit line, as long as you own the house. Use it to get caught up, buy a car, or buy $30K worth of food and distribute it to homeless shelters -- if the bank wanted it spent on one thing, they would have give you a car loan, home loan, student loan, etc. An open credit line is open.
If the house does go into foreclosure and is sold at sheriff sale, then the bank may be able to sue you for a deficiency judgment and try and recover the car. Lenders rarely go after deficiency judgments, though, as they know that homeowners in foreclosure don't have a lot of money to pay another judgment. It costs more to sue you than they will ever be able to collect.
But if they know that you purchased a brand new car right before the foreclosure, then they may know what asset they can go after. So there may be a slightly higher incentive for them to sue you after the foreclosure, if the property does not sell at sheriff sale for the total amount that you owe on the loans.
If you're behind on the mortgage and go into foreclosure, your credit is already shot. Too late to change that now, but you can begin using credit more wisely in the future. If having a new car paid off with dirty open credit line money will help in that regard, then make your plans for the best possible future and go with them.
You have a responsibility to do what's best for your family and yourselves, not to protect banks from giving you too much money and borrowing ability. Banks gave a lot of loans to homeowners who were never going to be able to pay them back, so you'll just be doing exactly what the banks designed these loans for.
Hope that helps.
ForeclosureFish
http://www.foreclosurefish.com/...
That takes the cake as one of the most financially irresponsible things I have heard in a long long time.
On a side note, do you really think that if you are in foreclosure the lender is going to allow you to draw funds from your defaulting heloc that is probably in second position anyway and they will never receive a dime of it back?
It's scary to think you would even consider it, husband's idea or not, you are considering it.
SHAME ON YOU!
If you are in a non recourse state you could get away with it, but if not they will come after you for any shortages. And if you buy a car, I guarantee you they will come after you!
How utterly stupid. Why not take the funds and make the house payment for a few months instead of being so irresponsible?
You will lose it all and are you aware that if they foreclose on the house and sell it that you WILL be responsible for the shortage?
Now tell your hubby to wake up. That $30k could go on the house. My day job is a credit mngr I am the person who goz to court and persues ppl like yourself. In this situation Firstly i would sue you and take Judgment against you then I would put a cavet on your property that meens if you sell i get the money first. If after that you dont come to some arrangment it is not only the bank who can force sale on your home any comany you owe more than $5k to can yet useually wont do it unless you owe at leat $30k.
What happens if you face forclosure and your debts are not all paid are you aware that a writ on goods can proceed that meens a company or companys take take your possesions (household) as well and car really anything of value you have that is not required to live such as the bed, fridge, washing machine & microwave.
Ok what happens if you still are not out of debt a company can apply for a garnishee and there is nothing you can do to stop it that meens no matter how much hubby earns your family will only have $282.00 after tax the gov dose not asses if you have childreen or need to pay rent. this is the national standard to survive. After that you can be sent insolvent this is on your record for 12 years and you have tight restrictions in regards to what you can do for 7 years.
Think Honey just Think ok, yet at this point if you want to save your possesions and your life you must have nothing in your name most ppl choose to put it in a family members name untill the stat declerations is over, 12 years. If you do that ppl like me cant touch your possesions we can only garnish your wage.
seek fin adv you may be able to enter into a part 9 or 10 insolvency agreement. You can get free fin adv via most charitys and it wont cost you anything to enter a debt agreement (part 9 or 10)
As the first answerer said, and I agree, this is the dumbest thing I have heard in a long time.
Do you plan on living in your car? What about when the SUE YOU... which they will.
You need to live on rice and beans... pay the mortgage, pay the electric bill, buy food and basic clothing... and that's it for awhile. Get the thing sold. Dont buy a car. In fact, if you have a car that is worth more then 10 grand, SELL IT and buy some cheap transportation.
If you have to, see if the mortgage company will do a short sale WITHOUT RECOURSE... meaning you will do a deed in leiu of foreclosure and the bank will not come after you for the difference from the negative equity. it's still bad, but not as bad as a foreclosure.
Have you called Jerry Springer yet? Here's an idea, take the HELOC and use it to pay your mortgage current... do the responsible thing... holy crap. you guys are the reason that the mortgage industry has fallen apart.
While you're at it, why don't you hold up a bank and rob a liquor store.
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