Looking for advice to give my Father regarding his fiances

[xrmx89x]

Hi,

I am looking for some advice to give my Father about his current financial situation.

He currently owns one commercial property and one residential property which he lives in. Since I can remember he has never been one to be good about paying bills, but he still stumbled along. Yet, it got way out of control when he bought this residential property. Over the pass few years he has been struggling to pay my mother child support, and it is to the point where she is going to start not being able to play bills.

It just seems he is pouring all his money into paying the mortgages on both of his properties. The only way I see him getting out of his situation is if he gets rid of one or both. On top of that the mortgage for his residential property is a variable rate, so he paying a lot of money monthly to keep it.

Out of the two his commercial property is most fit for being sold, and he would make a small profit from doing so. Yet, he does not want to sell it because he will not get what he wants for it. He has been talking about selling the residential property, but a Realtor friend of his came up to check it out. The Realtor told him he would need to put over ten thousand dollars or more work into the yard and the outside of the house to make it sell able. At the moment he does not have that kind of money sitting around to do so, and I do not believe he would make much from selling the property any.

The advice I am looking for is if it is possible for him to file some kind of bankruptcy or something similar to get rid of the house that would still allow him to keep his commercial property. Really any kind of advice would be appreciated. At the rate he is going the court is going to take the money out of his paycheck, so that he pays my mother. When that happens he is going to kiss both of his properties bye bye. I honestly think that would be good for him, so he could get a fresh start with everything.

[NoMoreCards]

Chapter 7 allows people to walk away from their unsecured and secured debts if they give up the properties that the secured is tied to. In otherwords, he can not keep his house and walk away from the payment. (it would be nice if we could. )

Chapter 13 allows people to keep property and pay their creditors over a 5 year span. Sometimes people pay back a small percentage of their unsecured while paying their secured.

Without knowing specifics of your fathers situation, it would be hard for us to even guess what would work best for him. What might be a good idea is to have him talk to a Bankruptcy attorney to see what they suggest. Most initial consultations are free and perhaps these questions would be answered.

Different states have different rules on what is and is not allowed.

I will say however that your father is a lucky man to have raised a young adult to be considerate of what ways to help, when he/she sees a need.

Best of luck to you.

[xrmx89x]

Thanks for the comment. May I ask what specifics I need to put in a post, so you know more about the situation? I will mention the attorney to him as well, didn't even think of that. I just see this as the easiest way out, especially considering the housing market at the moment.

[NoMoreCards]

The things that would help us get a better view of the situation is like Mortgage amounts, equity values, income, and other expenses along with your state, as each state has different rules.

Also, many commerical properties make money, so he probably gets a income from that as well and that would play into the decisions he needs to make.

But seriously I think your best bet it getting him to talk to a BK attorney, because he can get his questions answered and see what options are available to him.

[xrmx89x]

Ah ok I see. I know only really rough values on that. We live in Massachusetts as well. The attorney is the best option I agree there, but I would like to know a bit more about it. It would help, since he wouldn't think I am just trying to make him lose everything.

As far as specifics:

For child support he pays my mother roughly 25,000 dollars a year. He can't seem to pay a dime for it. I just cannot understand why he doesn't at least give something every week. He owes her 7,000 dollars right now. If she does not get anything suitable with in the next week, she is bringing him to court.

The commercial property was valued at over 1.75 million dollars. If he wants to sell he wanted it for 2 Million, but the chances of that are null given the current economic atmosphere. The mortgage itself I believe was around 10,000 dollars (this is on the low side last I knew he owed over a million on the loan) or more a month including taxes. When he remortgaged the building I saw a estimated profit of 70,000 dollars, but currently I do not believe that is the case. One of his problems is that 3 apartments are not being rented so he is missing about 5,000 dollars worth of rental income right there. Even so this building has always been a thorn in his side.

The residential property was valued at around 300,000 dollars. He bought it for around 210,000 dollars. The mortgage payment was around 2,000 dollars including taxes last I knew, it is a variable rate after all. I tried convincing to refinance into a locked lower rate, but he can't stand talking about this stuff. Can anyone enlighten me on that FHA government program for refinancing?

He grosses around 75,000 dollars at his construction job. He used to have his own business and still does side jobs for concrete. I'd throw in another 15,000 to 20,000 on top of his regular pay for that.

I know this seems like a decent income and all, but I have no idea where all this money goes too. He is not going out and buying fancy toys for himself. As far as I know it is all just going towards bills bills and more bills. For all I know he maybe paying on another huge item that I just do not know about. I hope this was helpful.

[NoMoreCards]

You state the mortgage on the commerical property is believed to be around 10K per month, and with his house of around 2K, that leaves him paying out more than he is bringing in if he is making about 100K a year. So there is probably more to this than we both know.

Because he has the business of his commerical building, and his house, it is possible he could file BK on just the business but I do not know about this. Perhaps someone else here does, but convincing him to see a attorney would be his best bet. Hopefully you can go with him, as you might come up with questions that your father has not thought of.

I recommend you and he sit down and make a list of assets, liabilities, income, current property values, and a large list of questions. Then call a couple local Bankruptcy attorneys for consultations only. The questions will be answered and he (and you) could have a clear picture of what his options really are. Explain to your father that by doing this he will not lose anything, but simply have his options opened up for him to see.

[xrmx89x]

Ok sounds good NoMoreCards. Thanks for the insight of this, it really has helped a lot. Hopefully he will take it the right way when I mention all this to him.

[NoMoreCards]

I wish you the very best, and again I commend you for wanting to help like this. I wish I could give you more specific information, but I do not have that knowledge.

Perhaps he could even have child support lowered if it is too high for his situation, I dont know but this is just another option to consider.

[DeadManCrawling]

There is another possible explanation.

Alzheimer's Disease.

I bring this up because we had a very similar situation, and you would be amazed at how easy it is to miss.

My dad in law has this ailment and we would have never known.

He was taken care of by mom in law until she passed away in July. Little did we know just how MUCH mom was doing. It was very well hidden, and by all appearances, dad seemed fine. In reality, he is seriously ill with this disease. If you meet him for lunch or a short conversation, you would never guess anything is amiss. In fact, he seems unchanged.

But, if you spend a few hours, you can discern the dramatic deficiencies. He, in fact, will forget that he had breakfast 10 minutes before, and ask when we will be eating. Or he will repeatedly call the same friend every night and share the same news over and over. He is a fan of Judge Judy. He sometimes will watch the same exact show, from the same day, four or five times, laugh at the same parts, and never remember. We learned this because we moved them into our home after she fell and broke a hip. She passed away from this accident.

Then, we kept him. And discovered the seriousness of something that would have gone undiscovered otherwise. While he lived with us, he forgot to eat for 4 days and ended up in the ER with a sugar count of 32. 100 or higher is normal.

This may not be the case with your dad, but it IS worth thinking about. It can go undetected for a VERY long time. And can result in the types of financial mismanagement you describe. Those are early symptoms, and well worth exploring.

There are options to slow the disease, but no cures or solutions yet. Soon, I hope.

Please do consider this, and I wish you the best.

-dmc