Am I better off forclosing on the home? My mother had no other money to pay for her debt.
My guess is that there are allowances and exemptions that you would be able to utilize that would allow you to walk away with MOST of the equity of the home, if not all. For example, you would be entitled to reimbursement for all administrative expenses, which legally take precedence over creditor claims. So you could reimburse yourself for any funeral expenses that you paid. You would also be entitled to a fee for serving as executor of the estate.
I would consult with a probate attorney to discuss this in more detail. Your situation is not ideal but it may be far better than it appears at first glance.
You might also negotiate with the bank to see if they will accept a deed in lieu of foreclosure. I have had MANY clients successfully negotiate payments of as much as $10,000 in order to walk away from a property. If you want to KEEP the property, you may be able to renegotiate the loan principal. You have options. Check with a lawyer to find out how best to proceed.
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You need to have the matter reviewed by an attorney to see the best course of action. Sometimes it does not make sense to open an estate and this could be one of those cases. This is dependent on how the property is owned and the nature of the debt. Sometimes you can negotiate with creditors of an estate, other times it is best to walk away.
This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/
Based on the facts that you present, I believe you have what is known as an insolvent estate. The estate's debts exceed the assets.
I have seen different approaches to this. I have seen some folk not bother to open a probate and just walk. Others open the probate and then Petition the court to allow the home to be abandoned and foreclosed upon. In Washington, at a minimum you have to file the Will which is not the same thing as starting a probate.
You need to sit down with Wisconsin counsel, show counsel the will and even be prepared to discuss what the heirs want to do. Even though administrative costs (e.g. filing fees accountant fees, attorney fees) are usually first in line to be paid from estate assets, I do not believe that means you get access to funds to pay of an underwater mortgage. That means you could end up having to pay your counsel to settle your mother's estate without reimbursement sine there will be no estate assets.
I am curious about how other counsel here deal with the personal property in the home though if you do not even open a probate. Heirs often just agree on what they want and take it since it is usually of de minimis value. Best discuss that as well with the Wisconsin attorney since there are usually items of sentimental value there.
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