What happens if i stop paying my heloc

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What the home equity lender actually does depends on the value of your home. If you have equity in your home, your lender will likely initiate foreclosure, because it has a decent chance of recovering some of its money after the first mortgage is paid off. The more equity, the more likely your lender will choose to foreclose. If you are underwater—your home is worth less than the amount you owe—your home equity lender may be less likely to foreclose.

Instead, the lender may choose to sue you personally for the money you owe. While a lawsuit may seem less scary than foreclosure proceedings, it can still hurt your credit, and lenders can garnish wages, try to repossess other property, or levy your bank accounts to get what is owed. Should that happen, it's important to contact your lender as soon as possible.

The last thing you should do is try to duck the problem. Lenders may not be so willing to work with you if you have ignored their calls and letters offering help. When it comes to what the lender can do, there are a few options. Some lenders offer to modify your loan or line of credit. This can include modifying the terms, such as interest rate, monthly payments, or loan length—or some combination of the three.

Other private lenders—such as Sallie Mae, which offers student loans—work with a borrower who is struggling to meet payments by offering multiple deferments and forbearance options. Help from the federal government is limited.