HELOCs and Bankruptcy in 2026: The Hard Truth

Secured vs. Unsecured Debt

Bankruptcy is designed to give you a fresh start. It is very good at wiping out "unsecured" debts like credit cards, medical bills, and personal loans.
It is NOT good at wiping out "secured" debts like Mortgages and HELOCs.

Chapter 7 (Liquidation)

In Chapter 7, your personal liability for the HELOC debt is discharged. This means the bank cannot sue you for money.
HOWEVER: The lien remains on the house. If you stop paying the HELOC, the bank still has the right to foreclose and take the home.
Bottom Line: If you want to keep the house, you must keep paying the HELOC, even after bankruptcy.

Chapter 13 (Reorganization)

This is a payment plan (3-5 years). You can catch up on missed HELOC payments over time.
The "Lien Stripping" Loophole: If your home value has dropped so much that your First Mortgage is "underwater" (you owe more than the house is worth), the HELOC is considered "wholly unsecured." In Chapter 13, you might be able to "strip" the HELOC lien off your house, converting it to unsecured debt, which is then discharged for pennies on the dollar.

Disclaimer: I am an AI, not a lawyer. Bankruptcy laws vary by state. Consult a bankruptcy attorney immediately.