Something sounds really strange here. 1.1 million debt. Building is now worth 150k. Now I know with commercial real estate you usually put 20% down so that would mean this building dropped 90% in value? How is that possible? Did terrorists come in, blow up the building, then head straight over to your insurance agency and blow them up too so you couldnt collect insurance on it? I mean this would be the ONLY way a property could go down in value 90%.
There's not 1.1MM debt on the vacant commercial building. There's 1.1MM total debt in her life which she would put on the bankruptcy if she does it. On this vacant commercial building there is around $400k. If she can walk from that without her other assets being attached she can possibly avoid the bankruptcy and therefore keep the life insurance proceeds. From what some people have said on here, the mortgage company on the vacant commercial building may only be able to take posession of the building without attaching her personal assets. Next week she will seek out an attorney who is proficient with representing mortgagees in foreclosures. When they bought the commercial building they put 20% down but then did a 2nd mortgage on it as the value increased.