AprilWhine wrote:
bigdogger wrote:
The ramifications are going to be to him and to his estate, assuming his wife is not living. If he has no estate, having a voluntary repossession (what would happen should you decide to turn it over to the bank) will result in a judgment that will be dismissed by his death. If he has an estate, use some of the assets from that estate to pay the deficiency balance once you sell the rig. Any hit to his credit rating will be moot, since once he moves into a care facility, he will have no need for credit.
This is very good advice. I assume since he has been a full timer for 16 years the house and any cash is long gone.
Actually, I was thinking the opposite. He had the ability to finance what must be a relatively expensive RV, if he is $12K upside down. Contrary to popular belief, most banks are not staffed by complete idiots. They would have had some basis to extend the loan. Often times these questions come because the heirs are trying to preserve as much of the estate as possible.
The test I always use is what decision would you make if the lender was not the bank, but instead a very good friend. It is one thing to tell that friend, "We are so sorry, but dad can no longer pay the loan, he has to have 24 hour care and the cost of that care leaves no money to pay you back." It is another thing to tell them, "hey, dad can't use the RV anymore, so tough luck, we aren't going to cash in any of his assets to pay you, we want the money when he dies. Too bad you made a bad decision on dad's health when you loan him the money."
Edit: OP updated information while I was writing this response. There is one other thing to consider. If there is life insurance involved, it may or may not be attachable by a judgment. If it is attachable, it would be advisable to pay the deficiency balance by hook or crook, since the judgment would have fees and interest attached that will snowball very quickly. Also, go and get a copy of the loan and see if your father signed up for any accident and health insurance coverage. Dealers often pressure borrowers to buy it because it is a big money maker for them due to the law of large numbers, but you are a number of one and such coverage would be an absolute windfall if he bought it.
