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Disability Debt Consolidation

I am disabled and cannot pay my mortgage. If the creditor forecloses, can I be sued for the deficiency balance?

In May of 2006 I purchased a home and had it finance by a bank, within 1 hour after the loan was approved, I had the bank to provide a home equity line on the same home, so that I could make repairs and improvements, they did I then made all the necessary repairs and improvements within 6-month period. Ten months after establishing the equity line of credit I was involved in a near-fatal accident which left me disabled for life, I was not able to work, and would never be able to return work,and could not make the monthly notes. I am now being sued by a lawyer which is acting as a debt collector that handle the loans that the banks write off, he has filed a Civil Law Action against me and demand total payment of the loan, not considering the fact that I have paid over 24 months toward the balance. I don't feel that I should have to repay the total amount of the loan. I also feel that since the bank regain possession I should not have to repay the remaining balance. The house was used to secure the loan. Can you advise, or give input on this matter.

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Bill's Answer
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I am unaware of a statute in any state that grants debtors a legal excuse to avoid repaying a debt due to illness or disability.

You mentioned mortgages. I surmise from your message that you are facing foreclosure for the first and second mortgage. Unfortunately, you did not mention you state of residence. Some states, most notably California and Arizona, offer laws protecting homeowners from a deficiency balance due to a foreclosure on a residence. If you live in a state with an anti-deficiency law, then you will be able to quit the house and have no liability for the first mortgage upon foreclosure.

Your home equity line of credit (HELOC) would not fall under any state's antideficiency law should you quit the property. (Some HELOCs may be, but not those that are taken after the initial purchase of the property.) Therefore, this would be an unsecured debt, much like credit card debt, a medical bill, or payday loan.

You mentioned that the collection agent for the HELOC is suing you. I am very curious about your statement. I find it unusual that a holder of a HELOC would have a cause of action outside of foreclosure. I wonder if the civil law action you mentioned is a prelude to foreclosure in your state. Unfortunately, without knowing your state of residence I cannot comment further.

Therefore, I urge you to consult with an attorney in your state who is experienced in litigation or property law immediately. Your options may become very limited if you procrastinate in finding an attorney.

I hope this information helps you Find. Learn & Save.



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