Q. My dad passed away, and we cannot afford to pay the mortgage on a home he bought five years ago as a second home. Our mom is alive but has dementia. Should we try asking for a short sale or try going through bankruptcy?
A. In this situation, I would advise you to look into a short sale. Since this is your mother and late father's second home, she may have another home with equity, or she may have other assets. Those assets could be in jeopardy if she lets the house go into foreclosure, and she might not be able to protect all the assets if she files bankruptcy.
Foreclosure is a dangerous option because, depending on which state she lives in, she could be on the hook for any unpaid balance after the foreclosure sale. For example, she might owe $200,000 on the mortgage, but the house sells in foreclosure for $150,000. She could be liable for the $50,000 difference.
Read the entire scenario at Fox Business
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