Is it legal if my lender is refusing to close the account of my discharged HELOC until they foreclose on the loan?

I declared Chapter 7 bankruptcy (MA) and it included both my mortgage and HELOC. The bankruptcy was discharged along with all my debts (2 years ago). The bank foreclosed on my property 2 years ago (as expected). But now they have begun trying to collect on the HELOC even though they know it was discharged and I do not owe on it. When I asked them to explain, I was told that the HELOC has to go through the foreclosure process even though there is no longer any property attached to it. This doesn’t make any sense to me. Can someone please explain?

Asked on September 1, 2011 under Bankruptcy Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If the HELOC was included in the bankruptcy and was discharged therein, the bank cannot collect on it--no creditor may collect on a debt which was properly discharged in bankruptcy. If they just mean to send you certain notices, to ensure that both for internal (their own processes) and external (e.g. if some question later arises regarding foreclosure) purposes they can document having fulfilled their obligations, there is not necessarily any harm in it--though you might reply to notices in writing (some what you can prove delivery) with a letter indicating the debt was discharged and with proof of the discharge. However, simply being bureaucratic and building a complete file is one thing; trying to make you pay is another, and they may not actually collect or try to collect from you if the debt was discharged.

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