Go Back To Search Results Question Home Equity Loans on Short Sales gone to collections? Readers Digest Version: My wife and I purchased a duplex in Kansas to rent out. I lost my job due to a work related injury. We had to short sale our primary home in California and the duplex in Kansas. Once the sales were finished, everything was fine until I received collection calls on the seconds on all three properties. Im confused, how and why can they now attach debt to me even when they were lines of credit on homes that are now sold....HELP By Posted on 05/21/09 Total Answers 4 Answers- You did not get permission to short sale from the HEL providers and their forgiveness of the balance. You still owe the money you got from them. And since you sold the property, it is immediately due and payable in full. You have no choice now but to pay it all off. Since the HELs have all gone to collections, you owe more than ever due to the addition of the collection costs. You didn't do your homework before you sold the properties. Actually, you're lucky they sold or you would owe a great deal more and prices are continuing to decline. BTW, if you don't pay off all you owe, plus the collection costs, etc, the IRS will want its pound of flesh. Unrepaid loans are considered income, therefore taxable. Answer by : ibu guru On Date 2009-05-21 13:22:06 Maybe it's because you still owe the money. Foreclosing does not make your HELOC debt go away. Since they can not get their money from the short sales...they will come after you for their losses. Answer by : reenzz On Date 2009-05-21 13:22:21 In CA while it’s a non-recourse state the HELOC is full recourse, this is also the same anywhere else in the US so any of your HELOC are full recourse subject to collections Answer by : goz1111 On Date 2009-05-21 13:27:46 I am a licensed real estate broker in CA specializing in short sales. I don't know about Kansas, but if the HELOC on the CA primary was a purchase money second, then they cannot do anything but issue a 1099. However, if it was a cash out refi and you used the money to buy a BMW, then they have a right to pursue you for the balance owed. That said, the truth of the matter is that your lenders wrote off the debt and sold the debt to these third party debt collectors who bought the debt at a discount. Obviously you are not in a position to pay them, so let them know that you are insolvent and unable to pay nor do you have any assets. Do not pay a dime. You can request that all their communication be in written form. Eventually, the statue of limitations will expire on these debts and you will be rid of them. The worst they can do is to take you to court and if they win, get a judgement against you. But I doubt that will happen. If it does, then maybe bankruptcy might be an option. Here's an interesting website about unsecured credit card debt: www.thecreditcardsolution.com maybe the rules apply to this stuation as well. Good Luck Answer by : satarnag01 On Date 2009-05-22 16:04:52   Go Back To Search Results