[donnasce]

My Dad (80 years-old) co-signed a house note with my brother . My brother fell gravely ill, lost his job and has been in the Veterans hospital for a year. He is an amputee and on kidney dialysis. He is 100% disabled. The problem is my brother's house mortgage is $800 p/month and my Dad is struggling to pay it, along the other bills. He can't let the house go back to the bank because his home, he shares with my mother, was used as collateral. My brother's house has been on the market for a year. With the economy the way it is, it is not likely to sell. The area they live in is economically depressed. My Dad MUST keep working and he is in bad health as well. He has been told by his doctor to quit work. He is at risk for a stroke. My Mother is ill also.

My brother's disability check will stop when he receives medicaid and is moved into a nursing home within the next three months. There goes any assistance that helped my Dad.

Could my Dad declare bankruptcy? Could my disabled brother declare bankruptcy? Would my Dad still lose his own home? They live in Virginia . Any help would be most appreciated.

[ScottGem]

I'm confused. Your dad put up his home as ADDITIONAL collateral for your brother's house? It is rare that a lender will take additional property as collateral for a real estate purchase. So I would first check the promissory note and other documents to confirm that Dad's home was used as collateral and has a lien on it.

If you decide to go the bankruptcy route (and that's certainly an option), both will need to file. If only one files, as co-signers, the lender can go after the other for the full balance.

[rockinmommy]

One other possibility...

I'm assuming Dad's house is paid for? (Are you sure Dad didn't take out a home equity loan and use that money towards brother's house?) Could your mom and dad possibly sell their house and use that money to pay off brother's house and then move in there? I'm sure they don't want to do that... but just trying to brainstorm here.

Also, have you (they) considered renting out brother's house?

[Fr_Chuck]

Yes, or sell brothers house for what they can get, borrow enough money from their own to pay the difference, the debt would be less.