Legal/Mortgage Question (About how to dump a house with crazy situation)

[Nobody]

My dad purchased his house in 2006 for $210,000. His only source of income is his Social Security Disability he receives every month. The last appraisal had the house at $153,000. He still owes $160,000 or so. So it's pretty worthless at this point in time. The neighborhood is full of foreclosures (the highest rate in one neighborhood in the area by far) so selling it is impossible, even at a loss. The homes here are not selling.

Here's the problem - he recently began having severe breathing problems, asthma attacks, rashes, etc. and couldn't figure out why. After checking the house thoroughly inside and out for a possible allergen source, I noticed the window frames on the front of the house where it meets the wood siding were rotting away, allowing water to pour into the wall whenever it rained. I also noticed the siding on the front was bowed in several spots, possibly also allowing water into there. So I tore away the frames to replace them and noticed that every bit of wood I exposed wasn't just covered in mold, but it appears the mold has taken root and grown inside of the wood too.

Just out of pure curiosity, I went inside and cut out a piece of the drywall about 1 sq ft, and the drywall was embedded with it as well, along with the insulation in the wall. The entire interior of this wall is inundated with black mold. I don't mean patches, I mean everything everywhere is jet black. So the house is a health hazard, and staying will kill him. Even though he purchased the top home insurance available when he got the house, it doesn't cover repair of this, because they said it would only be covered if it had been caused by a leaking pipe, and there are no pipes on that half of the house.

He had several companies come out to give a quote on repairing it, and they all said the same thing - the entire interior and exterior wall had to be replaced, and all the insulation had to be replaced. Also, they would have to set up full room dehumidifiers and seal off that side of the house completely until the work was done. The work would take 5-7 days to complete and be suitable for living again, and the estimates ranged from $38,000 to $51,000. He doesn't have that kind of money, not even close, and has no way to get a loan for that kind of money with his income.

Does he have any options for leaving in the next 30-60 days that wouldn't result in the loan company coming after his disability income, or pursuing legal action against him? To be sure, there has to be some option for someone who has a house that could kill them and can't afford the repairs.

 

[SC_RedskinsFan]

Couldn't he let it go to foreclosure? I know that sucks but I don't think they will come after him.... That is just a guess, as I am not a lawyer lol

 

[Om]

Crappy situation, brother.

I wouldn't even consider doing this without consultation with a qualified attorney first, but one potential solution is a personal Chapter 7 bankruptcy. The reason he'd do that rather than simply allow the bank to foreclose is that the bankruptcy would protect him against any possible deficiency claim by the bank. Particularly since the bank would have to assume the costs of the repairs as well as the outstanding note. Without the protection of the bankruptcy, the bank would be able to come after him (to the extent they can given his income) for the difference between what he owes plus the costs of repairs, and the amount they can then resell the house for.

Bankruptcy on his fixed income is a pretty sensible option in many circumstances. The bankruptcy trustee would have to look at any and all assets your Dad has, investments and tangible, and determine what if any value he could get from selling those assets in order to pay creditors. Every state has it's own set of "exemptions" that your Dad could use to protect his assets, either totally or in part.

Hate to not go into more detail than that, but every case is unique and there are enough variables where one size does not always fit all ... hence the best advice is to have him talk to a bankruptcy attorney to see if it's a good option.

Sorry to hear about the jam he's in--particularly the health issue--and here's hoping he gets healthy and finds the right solution to the problem.