House and Secured Line of Credit On Mortgage

November 19th, 2008 by Questions

About 18 months ago I added a $175k Home Trust Visa that was secured and registered on title to my mortgage. My first mortgage and this mortgage are fully current – my issue is that I am facing bankruptcy and I have $275k on my first mortgage and $175k on title as security. If I sold today – my house would net $450. I can make payments to both lenders – will they make me sell the house b/c the $175k is a security on the mortgage?
I guess my question is this- Is the equity on my house counted onl as the difference from mortgage balance of $275 and current sale value of $450 or does teh $175K Home Trust Visa/Line of Credit (that was all legally added on title) stay and so I can possibly keep the house if I have no equity?

I know it seems a little silly that 18 months ago I had equity (of about $150k) which is why I was provided teh secured line of credit but our houses have been decimated of late in value. If I am current – even after bankruptcy, woudl the line of credit call their money knowing that the hosue could be worth less than their share?

Posted from: Ontario

Questions

One Response to “House and Secured Line of Credit On Mortgage”



November 20, 2008 at 9:53 am, A licensed trustee said:

You’ve answered your own question – if the line is properly secured to the house and you have no excess equity (after the mortgage and line are paid) then your trustee will not have any interest in your house. If you keep all of your payments current you should be able to keep the house.

You are going to have to explain what you did to run up $175K on the line in just one year – you may as well start digging up the paperwork as your trustee will required a detailed listy of where the money went (if you are going to file for bankruptcy or a proposal).

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