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Can I walk away from an apparent insolvent estate?

Rocklin, CA |

my mothers debt outways her assets. She has about 125,000 in debt (credit cards, Medical bills) included is a mortgage of $97,000. Her house wont sell for more that $125,000 so wouldnt that mean its insolvent? And do I really need to file probate for that? Could I get in trouble for just walking away? I am the ONLY heir.

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Attorney answers 3


Let me first say that I am sorry for your loss. The probate procedure is no fun, so I can easily understand your reluctance to go through the hassle only to have it satisfy your mother's creditors. Not knowing what other debt she might have had, if the mortgage is her only debt and you think you might actually emerge from probate with a small but solvent estate then I think you could approach the mortgage holder, explain why the mortgage has not been paid and see if they are willing to work with you to get the house sold. Remember that a foreclosure is not without a cost for the lender so you might be surprised at their willingness to help. Good Luck


The answer provided above is in all respects correct. I just want to add two quick points.

First, you could also approach the other creditors and explore whether they are willing to reduce the outstanding balance in exchange for receiving something, rather than nothing.

Having said that, you may find that the amount of work involved is simply not worth it. Even if you got all creditors to agree to accept 50 cents on the dollar (a pretty ambitious plan), you are still left with an estate that is worth roughly $25,000 before you deduct for attorneys' fees, real estate broker's commission, and any applicable transfer taxes.

Good luck to you.


Generally, you are not required to probate a will. If the estate's liabilities exceed the assets, then by all means you should not file. Also, do not pay the mortgage if the property was owned only by your mom and you did not personally guarantee the loan.

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