So I'm in a bit of a complicated situation here, but I'll try not to be too long. Anyway...
My parents had my sister and me in their late 30s/early 40s with the full intention that we were going to go to college. Not just any college, but good ones like they and my maternal half-sister did (both of them got scholarships and my sister was "lucky" enough to have a deadbeat father who she's never met that paid for it). All of them have master's degrees, so it was just expected that we did at least as much as they did. Sure enough, we are at good colleges, but things have kind of spiraled out of control over the past few years. Let me explain...
In December 2008, my mom lost her job, and my dad lost his two months later. Both of them had six figure jobs, and we were soon to be hit with the burden of paying for my sister's college. I was about to finish my second year at a mediocre state school, and decided to leave (which I'd been wanting to do anyway.) Anyway, they had taken out a second mortgage to build an addition on our house - for some reason my mom thought it was necessary. But it turned out my dad had no retirement savings, and had been using that money to pay for his own affairs. My mom, on the other hand, had been saving for years. So you know what she did next? She liquidated almost all of her 401k to build literally a second HOUSE attached to ours. (I can't tell you how many people have parked outside and just stared since we did it... it's so awkward.) Like seriously, who does that? Especially when they have two kids in expensive colleges. They took out Parent PLUS loans, expecting for the situation to get better overnight. Now they are at the point where they have to pay the loans back, and they're no longer eligible to defer.
Sure enough, my dad's been out of work for 3 1/2 years, and it doesn't look like that's changing anytime soon (since he refuses to take a job "below him" or work for himself). Best case scenario, he will probably take out social security early when he turns 62 in March. My mom has since worked three jobs, and is currently making $60,000 a year, but that is barely enough to pay all our bills. My mom's reasoning behind building that addition was that she thought it would "make my dad get a job" if there was no money. I'm definitely concerned about her mental health, and why she is so self-destructive financially. I myself have some mental health problems (which do very much run on her side of the family...) and was under so much stress that I ended up failing out of college when I was just 7 classes away from graduating, but because the dean knew me and that my situation was kind of abnormal, I was granted a leave of absence for one semester. I've also had a couple friends help me out financially, which has led me to intense guilt (and, I soon learned, a little frustration on their part.) Basically, this is a really stressful situation for everyone involved, and I'm trying to get help because no one else is.
Okay, sorry that was so long. But basically, I want to know - what are my parents' options? They owe over $100,000 in Parent Plus loans, about $300,000 on our mortgage, and are in their early 60s. I know you still have student loan debt if you file for bankruptcy, so that's not an option. Our house is worth a little less than $500,000 - is our only real option to sell it? This wouldn't be such a big deal to most people, but with all the work we put into it (and which was never finished) we're afraid that it wouldn't pay off. Also, that people wouldn't buy it because it's not in the greatest area. How do we handle this?
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