Legal Question in Real Estate Law in Illinois
I own a home in IL, which I lived in for 5 years and have rented for the last 3 years...it has been vacant since November 2010 & I am currently renting a home as my primary residence in another town but cannot continue to pay both a rent & mortagage...I'm having trouble renting my property to a good, reliable tenant...I'm upside down in my mortgage & considering short-selling or foreclosure...
1) what is my best option?
2) what are the implications if I don't have to/want to file for bankruptcy?
3) can the lender seize my assets, i.e., savings account, vehicles, etc.?
4) do lenders work out payment plans to resolve a deficiency if a short sale is approved?
5) Can I walk away without proving hardship, losing savings & assets?
Due to the vast decrease in property value in the area along with undesirable tenants/residents & crime, the property has become a liability for me & financially draining (high interest mortgage, association fees, property taxes, insurance, improvements/repairs, maintenance). At this point, suffering from bad credit for 7-10 years seems a small price to pay for peace of mind & shedding stress, which is taking its toll on my health.
Many thanks for your advice,
IL resident with an albatross around her neck
2 Answers from Attorneys
Your best bet would be to file a bankruptcy, as it is unlikely that you would find a viable purchaser.
Frankly, my thinking is that this is too complicated on the one hand, and there are other factors that you may not be sharing, that could have a bearing on how to answer this, that makes an email response in my opinion inadequate. For example, it might make sense to find a way out of your lease and move back to the devalued property and possibly talk to the lender about a loan modification even with the decrease in value. It may make sense to talk to the lender about a short sale and finding a way to deal with what is called forgiveness of debt income. Do you have a family with additional considerations? Or as Mr. Dobra says bankruptcy may be a way out but again there are potential income tax consequences. You'd be best advised to sit with an attorney and work through the options with a complete assessment of your situation.
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