Where/ How to stash this cash legally?

[mgookin]

Young widow chooses to default on mortgage on a vacant commercial building because it's draining the proceeds from her late husband's life insurance. The commercial property is in her name personally. (We all know it was wrong to have it in her name personally but that's water under the bridge now; a separate entity would have prevented this very matter).

There is $250k cash left from the life insurance proceeds.

She's going to default on $1.1MM +/- in debt; the creditors are lucky if they get $150k for the commercial building in this market. A year ago it probably would have brought $500k. There is other debt going into the bankruptcy aside from the debt on this commercial building.

She does have a fair income (maybe $150k/ year) from an ongoing business which her and her husband started 10 years ago.

Is there anything she can do with the remaining life insurance money (about $250k cash) to keep it from being taken in the bankruptcy?

 

[gnome]

Quote from mgookin:

Young widow chooses to default on mortgage on a vacant commercial building because it's draining the proceeds from her late husband's life insurance. The commercial property is in her name personally. (We all know it was wrong to have it in her name personally but that's water under the bridge now; a separate entity would have prevented this very matter).

There is $250k cash left from the life insurance proceeds.

She's going to default on $1.1MM +/- in debt; the creditors are lucky if they get $150k for the commercial building in this market. A year ago it probably would have brought $500k. There is other debt going into the bankruptcy aside from the debt on this commercial building.

She does have a fair income (maybe $150k/ year) from an ongoing business which her and her husband started 10 years ago.

Is there anything she can do with the remaining life insurance money (about $250k cash) to keep it from being taken in the bankruptcy?

Many commercial properties are financied with "non-recourse" loans. If that's the case, she can walk and all the mortgagor can do is foreclose.

 

[mgookin]

Quote from gnome:

Many commercial properties are financied with "non-recourse" loans. If that's the case, she can walk and all the mortgagor can do is foreclose.

Would the phrase "non-recourse" be in the mortgage or note? Is there another term or phrase to look for?

 

[fearless9]

Quote from mgookin:

Young widow chooses to default on mortgage on a vacant commercial building because it's draining the proceeds from her late husband's life insurance. ...................

Is there anything she can do with the remaining life insurance money (about $250k cash) to keep it from being taken in the bankruptcy?

This forum seems a very strange place to ask such a question.

regards
f9

 

[gnome]

Quote from mgookin:

Would the phrase "non-recourse" be in the mortgage or note? Is there another term or phrase to look for?

If it were "full recourse", it would state something like, "..if the property is forclosed upon and there is a deficiency, the borrower is fully responsible for that deficiency..."

That means the lender can sue and try to recover the deficiency amount from all personal assets except those specifically excluded by law.. probably IRAs, pension funds, perhaps personal residence, etc.

 

[nutmeg]

Maybe an annuitized annuity. She could buy one, the money is basically gone for practical purposes, then she could draw an income on it.

I think you should talk with an insurance agent, they have products to make money disappear.

 

[BlueHorseshoe]

If you own a home in Florida, I think it is protected from bankruptcy proceedings. This is why OJ Simpson and Enron execs (people in trouble) quickly buy a home and establish residency in Florida. Through bankruptcy, everything else is lost, but the home is a protected asset.

Just my impression ... I could be mistaken.

 

[mgookin]

I found her mortgage online

Sec. 2.03 Power Of Enforcement
If, after applicable notice and cure periods, an Event of Default shall have occurred, Mortgagee may, in accordance with applicable law, either with or without entry or taking posession as hereinabove provided or otherwise, proceed by suit or suits by law or in equity or by any other appropriate proceeding or remedy:
a) to enforce payment of the Note or the performance of any term hereof or any other right
b) to foreclose this Mortgage and to sell, in its entirety or in separate lots or parcels, the mortgaged property, under the judgment or decree of a court or courts of competent jurisdiction, and
c) to pursue any other remedy available to it.
Mortgagee shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking posession, or both, as Mortgagee may determine.

(the pdf was an image and I could not convert it to text so I typed it)

Opinions? Does para A mean they can go after her personally?

 

[mgookin]

Quote from BlueHorseshoe:

If you own a home in Florida, I think it is protected from bankruptcy proceedings. This is why OJ Simpson and Enron execs (people in trouble) quickly buy a home and establish residency in Florida. Through bankruptcy, everything else is lost, but the home is a protected asset.

Just my impression ... I could be mistaken.

In Florida your homesteaded property is not subject to enforcement of a judgement against you. That's why persons with huge civil liabilities buy homes in Florida and make it their homestead.

 

[gnome]

Quote from nutmeg:

Maybe an annuitized annuity. She could buy one, the money is basically gone for practical purposes, then she could draw an income on it.

I think you should talk with an insurance agent, they have products to make money disappear.

LOL... I don't know whether this was a "tongue-in-cheek" comment about insurance products..... clever in either case.

I doubt annuity payments would be excluded from attachable assets.

Houses in Florida... that's a different matter. Many hoping to escape legal obligations buy a big house and pay cash just for that purpose.