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Mortgage is to the max. There is no money for repairs or mortgage payments. bank is threatening foreclosure. should I let them foreclose or file bankruptcy on her behalf. I have dpoa.

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You can just have mom "drop & walk" as in drop off the keys to the mortgage holder and walk away. Ton's of folks have done this already. Totally a cluster to a credit score, but that likely is not an issue for your mom. If you do this, please send the keys with the address attached to the mortgage holder and mail it certified mail, return registered receipt (the green card) at the Post Office. It will run about $ 8.00. The RRR will come back to you with a signature of whomever received it and you need to keep this someplace safe to prove you mailed it.

But you have to give some thought as to what realistically is mom's situation as far as her length of time to still be here, on hospice and what degree to caregiving you all can provide in your home. This is a harsh reality that you need to think about.

I bring this up because, when the caregivers get to the point where they cannot continue to provide the care needed (hospice doesn't do everything), then family realizes that a nursing home will be needed. Here is where it can get sticky, Medicaid is run by each state and you have to be a resident of the state. Mom - because she owns property out of state - will not be accepted on Medicaid as her "owning" the property will keep her from being eligible. If she does a drop & walk, then until it goes through foreclosure, it still is her asset. Depending on her state and the bank, this could take months & months. All the while she would be ineligible for Medicaid. If she instead sells it, the $ from the sale will have to first go against the mortgage and anything left over will become a spend-down asset before Medicaid will pay. So make sure that if you do a sale and there is $ left after the mortgage is paid, that it is 100% completely spent on her, her care and her needs.

Foreclosure's are mess to deal with because if she sells it below the payoff for the mortgage, then it will be a "short-sell" or "short sale"and you kinda have to have bank approval to do this. Short sells take more time and the bank can reject the offer. Total PIA. If you think the bank is going to take the stance that it's the whole amount due no matter what, then send them a letter with a copy of something official that Medicare hospice is happening for her, and clearly state that she is on hospice and either they work with you to sell the house for whatever or they can deal with probate court in another state to clear the title and the property may just also have a Medicaid claim or lien on it too if mom ends up in a nursing home. Good luck.
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Perhaps a sale is the best answer. Lots of "flippers" are looking for distressed properties to rehabilitate.
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How far under water is the property? Would it be worth preserving if you had $20,000 to spend on it? Does she have other debts that could be forgiven in bankruptcy?

Do whatever is easiest and cheapest. You probably don't need to worry about her credit score.
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Bankruptcy.
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I don't think anyone of us can really give you an answer. It is best for you to contact an attorney specializing in foreclosures/bankruptcies in her state.
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