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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55711
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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Bought a house in different town. Put our old home on market.

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Bought a house in different town. Put our old home on market. Sold with full asking price in 2 weeks. Inspection revealed foundation as problem which will cost 20,000-30,000.
Just now Septic failed and we may have to hook onto sewer----15,000-20,000.
Electrical problem found and fixed---$1000. Two other issues need to be done probably totaling about 3,000. We could use everything we have and fix this, then be broke of our savings. I wanted to give the house back to bank, but after researching found that since we have not missed any payments and do have money in bank, that won't work. Do you have any ideas how we can legally solve these $$ issues with the house? Thank you.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. If this were me, I would take the money out of the bank, stop making payments, and let the bank foreclose. That process will take at least 6-12 months for them to foreclose. It's not likely the lender will pursue you for any deficiency. Whether or not the lender even can depends upon what kind of foreclosure the lender in Washington uses.....if they choose to foreclose by non-judicial foreclosure which the overwhelming number of lenders choose, then the lender has no right to pursue a deficiency and all your assets would be safe. If, on the other hand, the lender chooses the judicial deficiency route, which lenders seldom do, then they could pursue a deficiency against you. But, Washington has a generous homestead exemption which would likely protect the equity in your new home. Your retirement account assets are exempt from their reach. If you have excess money or assets, then you might want to consider putting your non-exempt assets into a family limited partnership. Carefully drafted, this converts assets that a creditor would find attractive to go after into a limited partnership interest with no control, no rights other than that of an assignment, no transferability, no marketability, and no right to distributions. The transfer is for fair market value…i.e., you are simply exchanging one asset for another of equal value to you. And, you maintain control through a general partnership interest that you control. Yet, when complete it essentially is an asset no one wants and thus the creditor is less likely to pursue the debtor. Family limited partnerships must be carefully drafted and one would need an attorney experience in this area to do so, but they can be a very effective method of asset protection.

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Thanks so much for the positive rating and the generous bonus! I appreciate your kindness and the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help!