What To Do- Assisted Care Facility and Motor Home.

[Sgeorge]

Unfortunately we have reached the point where my father needs to be placed in an assisted care facility. He’s had a wonderful time full timing in his RV for the past 16 years. Many great memories for him over those years, the issue is what to do with his RV? He cannot afford both the care facility and the Motor Home payment. He is upside down on his loan about $10,000.00 – $12,000.00 depending on what source is used for the value. We are looking for advice from people who might have been through this with their families. We are in no position to take on his loan payment (son’s college tuition) nor do I want the Motor Home. Obviously selling it for the payoff is not going to be possible. Giving it back to the bank has come up in conversation, but we are concerned about possible fiscal and legal ramifications.
Any suggestions/advice would be much appreciated.

[bigdogger]

Though a bit off specific topic, this is probably a good time to mention it is situations like this that inevitably lead to threads entitled "I have great credit, yet I can't get financing to full time RV". I have a whole lot of experience with the entire credit approval process, and situations like this are held up as examples of why tight underwriting is never a bad thing. My guess is if the research being done by the family indicates a $10,000 or $12,000 dollar loss, the actual loss by the bank will probably be double that.
Even with a voluntary repossession, they have many steps that need to be taken before the rig can be sold, so it isn't going on the market for several months, probably running up storage costs, and if it needs any work, they will have to pay, because the loan officer isn't going out there and washing the rig, repairing a broken black tank valve or changing the oil. They also are not going to even attempt to retail the unit, so they will be getting wholesale price. On top of that, they are not in the vehicle business, so their interest will be to get out quickly, and if that means selling in October rather than prime time May, that is what they will do.
You can be sure that the next time a loan request for an RV comes across the desk, this transaction will be front and center in the mind of the loan officer who is judged not only by how many loans he makes, but by how profitable they are. Outcomes like the one likely to occur in this thread serve to tighten the screws a little bit on future RV loans to people who have sold everything and bought into full time RVing.

[demoon]

If you decide to go with an attorney or "financial adviser," check them out carefully. Been there, done that, and spent too much money for what ended up being bad advice. Most states have an elder affairs division that should be able to give unbiased advice. If our sad state, MA, has one, others must.Just google your state for elder affairs. Example:http://www.mass.gov/elders/senior-legal-helpline.html
Good luck.

[mlts22]

riven1950 wrote:
1- Talk to the Bank

2-If that does not somehow resolve it, Talk to a GOOD Bankruptcy / Estate attorney

If he truly has no assets / way to pay other than retirement income then a chapter 7 bankruptcy will likely solve the issue. I am personally against Bankruptcy but sometimes it is all you can do. It would eliminate any possibility of a judgement attaching to his income needed to pay monthly living expenses, and, as someone said the credit ding won't matter.

Resolving with the lender somehow will likely be less expensive if they are convinced they are going to take a hit one way or the other. Offer them the fee you would pay an attorney and bankruptcy court in cash to settle the debt. Some will deal, some will not.

X2. Talking to the bank shows that you are acting in good faith. If that is a no-go, then the bankruptcy attorney is probably the best way to go. In fact, during the bankruptcy, if the motorhome is sent back to the bank, the entire debt, including the potential deficiency judgement can end up being wiped, putting the matter in the past.

I also don't advocate bankruptcy, but this case, there are no real options left.

Warning: Make sure not to sign anything that makes -you- assume any of the father's debts. I've seen some companies try ruses like this in hopes of roping other people in as co-signers.

[AprilWhine]

Whatever you decide to do, one thing to keep in mind is that his teaching retirement income is not attachable.

Can Judgment Creditors Go After My Retirement Accounts?

[riven1950]

1- Talk to the Bank

2-If that does not somehow resolve it, Talk to a GOOD Bankruptcy / Estate attorney

If he truly has no assets / way to pay other than retirement income then a chapter 7 bankruptcy will likely solve the issue. I am personally against Bankruptcy but sometimes it is all you can do. It would eliminate any possibility of a judgement attaching to his income needed to pay monthly living expenses, and, as someone said the credit ding won't matter.

Resolving with the lender somehow will likely be less expensive if they are convinced they are going to take a hit one way or the other. Offer them the fee you would pay an attorney and bankruptcy court in cash to settle the debt. Some will deal, some will not.

[raindove]

You really should find a good attorney and get some solid legal advice. Things are probably different in every state.

[Me_Again]

pianotuna wrote:
Hi,

Go talk to the bank--find out what options they might have.

This is the correct thing to do ASP. Believe it or not, it will not be something new to them. If you do not like or understand their options, then you may want to talk to someone else. If you have any interest in the unit, then they might right off the balance and give you the title.
Cleaner way out for them. Just make sure up front that you are not responsible for his obligations.

Chances are however, they will just arrange to have someone pick it up and it will end up on a Crazy Ape repo lot. Chris

[JJBIRISH]

As much as members like to help and have a wealth of information, there are too many possibilities, to many scenarios, to many issues, to give any usable advise… great advice for one might be terrible advice to another in similar situations…
What you may get is good key words to formulate good questions for the lawyer you need to talk to…

[AprilWhine]

bigdogger wrote:

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."

Looks like the OP has confirmed my assumption. Upside down by $10k could be what's left when buying a new expensive motorhome and financing it for 20 years. 😉 Not saying the OP's father did this, but the hubby moonlighted at an RV repair place while he was active duty military. He said it was nothing unusual to see people come in with broken RVs who had sold their house and used the money to make a down payment on an RV. Then they came into the shop, 10-20 years later, with an RV that needed major repairs and no money to repair it. A lot were even still making payments.

Sgeorge, I'm very sorry your father has come to the end of his Rving. But he and his family have at least 16 years of fond memories.

[pianotuna]

Hi,

Go talk to the bank--find out what options they might have.

[bigdogger]

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.

[Sgeorge]

Thanks bigdogger - I should have included that information. No wife (died last year). No house, sold it a long time ago, Savings is used up. He is living on his state retiremnet after 35 years of teaching.

This is really a sad thing to deal with, just trying to figure out the right thing to do..

[AprilWhine]

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.

[bigdogger]

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.