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Foreclosure & Debt In The Us

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I wonder if anyone can give me any advice. My mother in law is currently going through a divorce. Her and her ex husband bought a property in Florida in 2004 for $300,000 it is now only worth $120,000 at best. Her ex husband has been unemployed for the last 2 years and during that time the property in the US has had some rental income from holiday makers which along with top ups from my MIL has just about covered the mortgage.

However now they are in the process of a divorce with her outgoings (paying full rent here and other debts accrude during the marriage in the UK) she is no longer in a financial position to help cover the mortgage and the holiday rentals seem to have dried up. Her ex husband wants to keep the property but he is unable to take on the mortgage by himself as he is unemployed, my MIL has no interest in the property at all and wanted to sell it some years ago when they would have still got more or less their money back. The US bank did mention the offer of a loan modification but as that would mean signing up to a joint 30 year loan and her ex is totally financially unreliable and her outgoings are huge she has turned this down. Her ex husband has been talking to the bank in the US about various options but as either of them are unable to make payments (and the mortgage is currently 3 months behind already) he has reluntantly agreed to either a short sale or foreclosure which my MIL is happy with as it seems the only viable option.

The bank have said that as the loan has not been paid for 3 months they will send the loan to foreclosure to commence legal action in the United States and in the U.K. They will then file for a bankruptcy in the U.K. to collect the deficiency.

Does this mean the debt will be passed to a UK debt collection agency, and if so what are the next steps as my MIL is unable to pay.

I know it's not a great situation, but we're just trying to find out some information for her as she is understandibly very stressed and worried about this. She retires in 3 years and has no financial stability to fall back on at all. Can anyone offer any advice, has anyone been in a similar position?


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I'm no expert, but I'd expect the bank/debt agency will be looking to recoup as much as possible from both parties. Your MIL and her ex.

Both seem debt-ridden, according to your description of the situation, with little or no savings. And they are renters, so no house to sell.

Best may be that they are both declared bankrupt. They might have some costs to pay for this. If the loan is with a US bank, it might be written off. UK bank? Not sure...would bankruptcy close the debt?

Given their ages, I expect they won't be able to buy in the future if they bankrupt. Maybe no a big deal for your MIL? She'll either rent the rest of her life or go live with you/family the day she can't cover the rent from her pension.

Nothing personal, but this story shows why buying property in far away lands is to be avoided by most folks.

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  • 343 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%

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