I had a commercial loan on a small apartment house during the banking crisis of 1990-94 which declined 80% from appraised value. By knowing the bankruptcy law and knowing how to negotiate I was able to reduce the loan without tax implications. It protected my house which was at risk due to mingling the collateral. I have access to the same resources and would be able to evaluate your situation to see if my experience is applicable. The basic plan is:
- Don’t pay the loan but instead pay operating costs and put excess into a private account as a war chest
- Let the lender contact you and explain the situation -don’t be afraid to cry pour mouth and put some fear into them
- See if the lender will let you sell privately and get an agreement they will not chase you for the shortfall. They may once they know you are serious
- Use your war chest to make your property salable and prepare to sell and take a hit
- Communicate the low offers to the bank and help them prepare their write off
- Look at IRS Section 108 to take any debt forgiveness as accelerated depreciation
