mother bankrupt after father's death

In ILL. My parents had a home equity loan, only making interest payments for years. Now my father has passed away and mother can not afford to live there. Should she file for bk. or let the bank forclose. The house is not worth any where close to what the loan is for. She also has medical bill (some may be dismissed on charity), because my mom is only getting S.S. ($1025) per month. Also, my dad had some life insurance, will the bank or creditors be able to seize that?

[Ladynred]

For peace of mind, your mother might actually be better off filing for bankruptcy and being rid of the whole mess. If they foreclose on the house, they will come after her for the deficiency so things could get ugly later on. The medical bills are all dischargable too.

The life insurance may be exempt all the way around. If the policy states that the proceeds can NOT be used to pay the debts of the deceased, then that money is hers - as it should be.