Need Help! Bank Charge off of home equity loan 6 years ago.



I had a 31k home equity loan charged off by Citizens Bank just over 6 years ago. I now am about to refinance with another bank and this remains on my title search. I thought the loan was discharged but now they want it paid at the closing of the new line. We have been inquiring about whether this was account still open for years and every call we made to the bank came back with you have no accounts at the bank. There was nothing on our credit report and to this day they can not supply us with any account info just a pay off letter.
Can anyone tell me if there is a statute of limitations on this? Does the bank owe us further documentation seeing that they have been so untrustworthy and can not supply us with any payment history etc.


LoanSafe Member
Jun 20, 2017
Can anyone tell me if there is a statute of limitations on this? Does the bank owe us further documentation seeing that they have been so untrustworthy and can not supply us with any payment history etc.
Look at this from the banks point of view. You defaulted on a $31,000 loan and don't appear trustworthy to them either.

Charged off does not mean the balance goes away and you owe nothing. Charged off simply means the bank took the loss and sold the debt to someone else.

Unless you filed bankruptcy, you are still responsible for the debt, which in the case of home equity loans, is secured by a lien on your house. Home loans are different than personal debt like a credit card or even a car loan. It's a secured debt using your home as collateral. Filing bankruptcy would release you from the debt, but the bank still has a lien on the property. Liens can be assigned/transferred so eventually, the lien holder will need to be paid to release the lien.

Of course there are statue of limitations on debt. Check with your state to find out what it is. SOL on real property can be a few years, or in some cases, NEVER. I filed bankruptcy in Michigan and had a HELOC discharged, but the lien was assigned to a debt buyer. In Michigan, there is no SOL for real property. In other words, the lien holder can hold out for years until you are ready to sell or refinance and still get paid.

First thing I would do is go to your county clerk/register of deeds office and see who the lien holder is. You will probably find all the documentation from original loan to discharged to assignment or transfer of the lien.

When did you look at your last credit report? Your title search company found it, so it's on there. If all you did in the past 6 years was contact Citizens Bank, they were telling you the truth: You didn't have an account with them. They have no legal obligation to give you any more information.

Go to your county clerk and then try to negotiate with the lien holder. That's probably your best option now. You may be able to get a settlement from them so you can refinance but don't count on it. Rising home prices mean lien holders have no reason to negotiate for less than what is owed. And now that they know you want to refinance, they have even less of a reason to release the lien.

One bit of good news is that the HELOC is basically a second mortgage. And second mortgages rarely if ever foreclose on a home. They need to pay off the first mortgage too. Very unlikely if your first mortgage balance is $200,000 and your second mortgage balance is $30,000. If you still have a first mortgage, keep current on it and unfortunetely, you prob wont be able to refinance until the HELOC lien is settled.


Thank you for the info. Much appreciated.
We did file for bankruptcy in Massachusetts and the statute of limitations on debt collection is 6 years. I do not know if this applies to real property. If it in fact does apply to real property would the bank be obligated to remove the lien from the title?
Citizens Bank still holds the lien from the charge off which was greater than 6 years ago.

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
San Diego, California
I have been refinancing charged off liens that are older than 4 years quite often recently. Many of them now threatening foreclosure - a big one being SLS. There are also 2nd liens hanging out there that haven't been paid on for 10+ years that have not charged off the lien as well from what I've recently encountered which would hinder a borrowers ability to refinance because of payment history guidelines.

There's 2 different scenario's that I run across often:

  • Borrowers that have been able to get the lien holder to agree to a settlement for less than what is owed (this is less common now because of all the equity in homes).
  • Second lien holders unwilling to negotiate to a lower amount and require being paid off in full (most common).

Ultimately you want to take care of the 2nd lien via a refinance because we have been seeing them become active in pursuing the debt that is owed to them. For example, some people that reach out to me already have attorneys from the servicer reaching out to them forcing either a modification or foreclosing on the home.

From what I've seen recently, the modifications that they offer are not beneficial and require a significant amount of funds to reinstate the loan.

Feel free to give me a call if you have any questions on this topic or are in need of a loan officer that is familiar with helping people under these scenarios. My contact information is: 619-379-8999 or [email protected]