Father died - Upside down in mortgage, low pension, cc debt.

[VaLiving]

What is the name of your state? INDIANA.

I am trying to figure out what is going to happen with my Mom, following the death of my father a couple weeks ago. My Mom lives in Indiana and have a home in which they owe about 250,000. The home properties in the area have gone down, and there is ABSOLUTELY NO WAY she will find a buyer for what she owes for the property. My father had about 10,000 in debt on a CC that was in his name only, and a couple of credit cards that my parents opened up jointly with about 20,000 total. My mom is only going to get about 20,000 in Life Insurance, and receive a pension of about 1500 a month. She doesn't want to stay in the home, so losing it would not matter, however of course she wants to try and maintain a decent credit rating and not have her pesonal belongings taken from her. Will she HAVE to use the life insurance to pay for the debts? She would rather have the life insurance money come to her at a later time so she has something to try and get back on her feet with. Can the mortgage company and/or credit card companies take her life insurance money or garnish the pension that she will now receive? Very confused, and worried about mom....Any help??

 

[VaLiving]

Hi...We are still lost looking for answers....Mom is supposed to consult an attorney this week, but I am looking for some feedback so that mom can ask the right questions...

 

[seniorjudge]

I am assuming that mom owes on the house too. If that is true, then the lender can go after her for a deficiency after the foreclosure (if there is a foreclosure and if there is a deficiency). If she does get a judgment against her, the judgment creditor (the person who has the judgment against her) will go after all of her assets.

(Note: I did not answer credit card or pension questions.)

 

[VaLiving]

seniorjudge,


Thank you so much for the reply. After reading your reply and hearing the term "deficiancy", I researched it for a bit and came across this...On the FreeAdvice website:
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Some states have anti-deficiency laws which protect purchasers of residential real property used as his/her primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the mortgage payment and the property is foreclosed (title taken by the lender through a legal procedure) and sold to pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur. Under anti-deficiency laws, if the mortgage is a purchase money mortgage for the purchase of a dwelling occupied by the purchaser, the purchaser will not be held responsible for any deficiency - the lender can only recover the property and the proceeds of a subsequent sale - the purchaser does not pay any deficit between the sale proceeds and the outstanding loan balance.

Anti-deficiency laws typically provide no protection for non-purchase money mortgages (such as a second mortgage obtained after the original acquisition) and there is no protection when the property is not used as the primary residence of the purchaser.
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After researching some more though, it appears as though deficiency judgements are allowed in Indiana. So, what about selling short? I am assuming the mortgage is about 250,000....Buyers probably wouldn't pay more than 200K...

 

[seniorjudge]

After researching some more though, it appears as though deficiency judgements are allowed in Indiana. So, what about selling short? I am assuming the mortgage is about 250,000....Buyers probably wouldn't pay more than 200K

Talk to the lender. They would rather have the money more than the land.

And, last time I checked, $200K is more than $0.