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  1. #1
    Join Date
    Aug 2011
    Posts
    11

    Smile Can a Creditor Force the Sale of My Home if My Debt is Larger Than the Value

    My question involves collection proceedings in the State of: Indiana

    I owe about 250K in student loan debt. I discharged a bankruptcy two months ago. I am in default in almost all of them. About half of that total are from private student loans. My mother, whom I lived with and took care of the past few years, died a few weeks ago.

    I have about `130,000 in life insurance. There is a substantial mortgage and very little equity if the home were to be sold, however, I have enough money to pay it off and inherit it. (I am sole beneficiary, so she never thought it was necessary to do a will or protect the estate in any way).

    I have started to make phone calls to negotiate payments with everyone. Given the amount I owe, I get the impression I won't be able to satisfy them with my monthly payments and that they will go after my home and force me to resell it at the very worst, or take all the money when I do sell it someday.

    Will they still pursue a forced sale if I am making good faith effort payments regularly? If I am repaying all that my income level allows me to give? I owe so much that the sale of the home and the application of the equity to my debt leaves me in the same position as before-- unable to pay it all off! And with a new rent payment to boot. The homestead exemption in my state is only 15k or so.

    Should I let them force the sale of my home or is it better for me to let it go to probate and keep the cash from the insurance so I can make bigger payments for a while and pay off some of the debt?

    I've heard it from both sides... some say if you are making payments, no matter how small, as long as they are in good faith, that they can't sue you. My private loans are in default because of the bankruptcy, so maybe the laws are different in my situation.

    My situation feels so complicated. I've run my mind ragged trying to figure out how to handle this. Thanks for your advice!

  2. #2
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: Can They Force the Sale of My Home if My Debt is Larger Than the Value

    A house with no equity isn't going to be a ripe target for the creditors or other bankruptcy settlement. The $130,000 in cash will be. You should be discussing this with the attorney you're using for your bankruptcy.

  3. #3
    Join Date
    Aug 2011
    Posts
    11

    Default Re: Can They Force the Sale of My Home if My Debt is Larger Than the Value

    The bankruptcy is discharged. I did call their office and they referred me to an estate lawyer. I was under the impression that life insurance proceeds couldn't be targeted by creditors. It was meant as an inheritance.

    I have spoken to two estate lawyers and neither of them mentioned this possibility.

    This is devastating...

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