When the Florida housing market went bad, a whole lot of people found themselves with unexpected financial problems. And for the person who wrote to me with today’s question, the difficulties are still being sorted out, and it’s been years. I’m Ilyce Glink. Here’s your daily update. So I got a question from a woman whose husband purchased two Florida properties as an investment in 2006 for a total of $600,000. She writes that today, the properties are worth a grand total of $225,000, and that’s on a good day. It gets worse. In 2006, the husband co-signed a business loan for a son on which the son later defaulted. Both the son and the husband have since filed for bankruptcy. Here’s what the wife wanted to know. She asked: “My husband doesn’t want to walk away from the properties because he would still have to pay the total condo fees of $700 per month. We are now in our 70s, we can’t retire until we get rid of these mortgages. “Since we have this pending bankruptcy case, what’s the best option? My husband’s attorney has been trying to get a short sale agreement from the mortgage lender. “In the mean time, my husband continues to make the monthly mortgage payments which are twice as high as the rental income.” Here’s how I answered her question, and to really start it off let me just say this is a great example of how the recovery has really helped a lot of the country but there are pockets around the country, particularly in places like Florida and Arizona, New Mexico, Michigan, Illinois, the big foreclosure states where we still haven’t seen full recovery. I wrote to this woman: You didn’t mention when your husband filed for bankruptcy protection. He needs to talk to his bankruptcy attorney to understand what his responsibilities are from and after the date of filing. Usually when you file for bankruptcy, all of your assets become part of the bankruptcy. In bankruptcy, the bankruptcy trustee then decides who gets paid, when people get paid, and all the circumstances around the payments. Each payment your husband makes for those expenses reduces the amount that can be paid to the other creditors. That’s why the bankruptcy trustee is watching this from the get-go. Now, your husband’s bankruptcy attorney may have other ideas and options for him to consider. If he can sell the properties, that might be great. If they’re underwater, not so great, won’t be able to sell. But he should understand that he probably will need the court’s approval in any case. Once he filed for bankruptcy, his assets became covered by the bankruptcy court and any disposition of those assets has to be supervised or approved or both. After your husband discusses the situation with his attorney, he should have a better idea as to what his continuing responsibilities would be with those properties. If the bankruptcy is expected to be discharged soon, he needs to find out if these debts are going to be discharged as well. If they are discharged, he won’t have a legal obligation to continue payments on the properties. And that means even the monthly payments to the building itself. If that’s the case, the lender can then move to foreclose on the properties or accept a short sale, if a short sale is presented to the bank between now and then. If the short sale is accepted, the new buyers would take up those payments. They wouldn’t be discharged The takeaway point here is that you and your husband need really good counsel to walk him through where he is today, what his options going forward, how his credit will be affected, and how his other parts of his financial life will be affected. So please talk to the bankruptcy attorney and then work carefully with the bankruptcy trustee to make sure it’s all processed in the right way. I’m Ilyce Glink. If you want to learn more about investing in real estate, please check out my intentional investor series. It’s called How to Be Wildly Successful in Real Estate, and you can find it at thinkglinkstore.com. Use the discount code BUYNOW for a substantial savings and be sure to visit my website, sign up for my free weekly newsletter where you’ll see I’m working to rebuild America one house at a time.