I currently own 2 properties that I purchased and rehabbed with construction loans to my LLC from a local bank. I am behind in the interest payments, can’t get current, and the properties aren’t selling. They are both worth less than I owe in this market. I am trying to work with the bank but, all they want are some interest payments I can no longer make. I am trying to sell, pay insurance and utilities. I’m sure there is a personal guarantee on the loans to the LLC. Will they come after my personal house if they foreclose? My pension? (I still work) My wife’s pension? Is bancruptcy the way to go? In Illinois if they foreclose is the court going to grant them a judgement for deficiency? I tried to talk to a lawyer, but the ones I’ve tried seem to have no real interest over the phone. Know anyone in Chicago?? I need help!!!
Chances are good that your pension is ERISA-qualified and won’t be subject to your creditors unless you co-mingle funds. If there is a deficiency judgment, they can try to seize your personal assets in order to satisfy the judgment. They are limited to statutory exemptions, but a quick google search revealed real property is protected only up to $7,500.
How much do you owe on the homes? If you sell, there’s no way you can recover the initial investment? Did you just run into bad luck with these homes or where you in over your head since the beginning, but didn’t know?
You probably did personally guarantee the loans. Unless the LLC was established for several years and had assets, I don’t see why they wouldn’t make you PG it. I don’t think they would go after your house, at most, just a judgement against you and a huge hit on your credit for many years. Did you have to put up any collateral for the loans?
The homes were good investments at the time. The market caught me and many others. I owe $304K on a house that was bank appraised at 379K and 316K on the other appraised at 390K. I have one approved for shortsale that would leave me owing the bank about 60K but deal fell through. The second property is listed but no interest. Great area in the southside of Chicago that I have always done well in. No collateral was put up, just 20% on the initial purchase. Does anyone here have the info for me or able to refer me to someone who does?
rukool: try working with the bnak to get a loan modification if you can
Find a local investor club, ask other investors for lawyer referral and interview them.
Many banks will waive the deficiency judgment if a short sale or deed in lieu is worked out - in fact, I would be unlikely enter into either sort of transaction without getting something like a waiver of the deficiency out of it. Presently, most banks are sitting on deficiency judgments, as they tend to be too overwhelmed to work them.