Parents Facing Foreclosure: How Adult Children can Help

Many older Americans are really struggling financially. Some are forced to keep working well past their desired retirement age, while others retire only to discover that money is much tighter than they realized it would be.

Sometimes, older homeowners who find themselves under water are lucky enough to have adult children who are anxious to do whatever they can to assist their parents. The question then, is: what can be done?

If your aging parents are having a lot of money trouble – so much so that they are having trouble paying their mortgage and utility bills – you undoubtedly want to help. If you could snap your fingers and make all of their money woes disappear, you would. But what is the reality of a situation like this?

If your parents’ home is put up for sale as a short sale, you will have a really hard time being approved to buy the home “back” for them simply because you are not what is considered an “arms length” buyer. In other words, short sale transactions are structured so that no buyer has an advantage over another buyer.

An option that may be a reality if your parents are not paying their mortgage is foreclosure. However, if their home goes into foreclosure and is sold at Sheriff’s Sale, you’d be taking a gamble at being able to buy it back for them (you’d need to have cash on hand and the ability to out-bid other interested parties.

It may be wise for you to help your parents find a reliable attorney who can walk them through filing for bankruptcy. A NJ bankruptcy attorney will be able to ensure that the right type of bankruptcy is filed for your parents’ specific financial situation. They may be able to keep at least some of the equity (if there is any) in their home by using federal bankruptcy exemptions.

Your parents may also qualify for a Chapter 13 bankruptcy, in which their debt would be restructured so that it is more manageable for them, keeping them in their current home with new, lower mortgage payments.

Another solution would be to help your parents (with the assistance of an attorney) apply for a loan modification without filing for bankruptcy. If they are able to pay for most of their other monthly necessities, like utilities, food, insurance and medication, modifying the terms of their mortgage may be all that is needed.

The absolute, #1 answer to this problem is for you to personally bring their mortgage current, if you have it in your power to do so. This will ensure that your parents stay in the home while you decide with them which path is the best option for them to be able to continue making the payments after the dust settles.

Remember that it is always in your (and your parents’) best interest to work with a qualified attorney on matters as important as keeping their home. Ask about a free consultation meeting with a local bankruptcy and loan modification lawyer, and keep in mind that investing in their professional assistance will be worth it when you get the end result that keeps your parents at home.

Image credit: J.B. Hill

2 Responses to Parents Facing Foreclosure: How Adult Children can Help

  1. Pingback: If You Live to be 100, Will You Run Out of Money? | Veitengruber Law

  2. Pingback: Asset Protection in NJ: How We Can Help | Veitengruber Law

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