Even if the lender writes off the balance there will be a 1099 issued for what's owed in whoever's social secutry number is listed on the loan. And it has to be reported as regular income and is taxable.
To me it doesn't seem like they are in that bad of shape. Using your numbers, they owe $65,000, and could sell for $58,000. If your Mom has $60,000 in CDs, she will have to use some of that money to make up the $7,000 shortfall. Realistically, in this market with gas prices, she may only get $50,000 to $55,000, but she still has the extra money to make up the difference. Sounds like she has to suck it up, sell the thing at a loss, use her savings to cover the rest, and chalk it up to experience.
I'd suggest selling it for best offer and taking the hit on the difference. You just have to cut your losses.
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Contrary to what some believe, banks DO lose when loans go sour. Their aim is to minimize losses, so your mother might be able to strike some kind of deal with them if she explains the problem and asks for help. That would likely go onto her credit rating, however, which could end up costing her more than she'd save.
Personally, I think they should just sell it and pay the difference out of her CDs. She didn't promise to pay off the loan OR return the camper; she promised to pay off the loan. Some states may have different laws, but I think most lending laws are about the same, since banks are regulated by the feds.
For the best advice, she should see one of those greedy lawyers. ; )
TomG100 wrote: To me it doesn't seem like they are in that bad of shape. Using your numbers, they owe $65,000, and could sell for $58,000. If your Mom has $60,000 in CDs, she will have to use some of that money to make up the $7,000 shortfall. Realistically, in this market with gas prices, she may only get $50,000 to $55,000, but she still has the extra money to make up the difference. Sounds like she has to suck it up, sell the thing at a loss, use her savings to cover the rest, and chalk it up to experience.
This is how I see it...best to get on it and get it up for sale. Why wait for further depreciation?
Sell it yourself. If you allow the repo they will sell it at auction for half the value or less. And guess what you are probably on the hook for any deficiency balance plus costs.
Scene 1: Sell it for $50,000 and use $15,000 savings to pay the balance.
Scene 2: Repo. Sells at auction for 25,000 and you have 4,000 in fees. They apply the net $21,000 to the loan and sue for $46,000. Eventually they take the savings or the condo. But they will take $50,000 because more collection fees.
Scene 3: Figure out a way to keep paying. Use savings or possibly share ownership.
Don't let it be repossessed. They could sell it for $20,000 or less, come after her other assets for the balance. Repo is only an opening move in a loan collection.
You could try to negotiate a settlement for less; the lender's willingness may depend on what they think of their chances of getting the whole balance.
Nick Wildwood wrote: Sell it or keep or for yourself. You don't want the bank to repo it. After they auction it off they will still have a greedy lawyer and a collection agency hound her for the balance.
Exactly, they still come after you for any amount owed that the sale didn't cover plus expenses, towing, storage etc. Gets expensive! It happened to my parents some years back. Then they died 2½ years ago and BOA turned it over to a collection agency (illegally according to the AG's office here). Up until about 4 months ago I was still being hounded by the collection agency for my parents debt since I was the executor of the "estate".
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TomG100 wrote: To me it doesn't seem like they are in that bad of shape. Using your numbers, they owe $65,000, and could sell for $58,000. If your Mom has $60,000 in CDs, she will have to use some of that money to make up the $7,000 shortfall. Realistically, in this market with gas prices, she may only get $50,000 to $55,000, but she still has the extra money to make up the difference. Sounds like she has to suck it up, sell the thing at a loss, use her savings to cover the rest, and chalk it up to experience.
This is how I see it...best to get on it and get it up for sale. Why wait for further depreciation?
I agree too. With another facet. Have mom and dad come out of retirement and get jobs. From the info given, they likely can't afford retirement either. If they get jobs, they can continue to collect private pensions. And they can earn up to social security limit, before they lose that. If they sell the unit, for less than they owe, it will need to be paid off before the bank releases the title to the new owner. They need to earn $7800/year net to make the payments. If they cannot do that they need to be ready for the consequences of a poorly thought out decision. Lein on condo, and savings.
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