Need Advice....lawyers, bankers, etc?

Question

My parents used to run a business and made a great life for themselves, however, with the economy, their debt was so overwelming that they had to get their boat repossessed (approx $400,000). They decided that taking the hit on their credit was the best thing to do in their situation. 
Now, a friend of theirs said that because they did that, all of the other things they own (house, cars, etc) are going to get taken away to pay back the boat loan. I dont see how they could do that. Is that possible or is the credit hit the worst of the situation?

Heidi · Accepted Answer

First, it depends on the state that they are in and the bank that they used.  If they borrowed to buy the boat, then a car, then some furniture, etc., etc. all from the same bank, there could be a "dragnet clause".  This clause could allow the bank to take all of the personal property borrowed with that particular institution.  Go back and read the loan documents.  The information is required to be listed.

Anonymous · Answer

Unlikely likely house and car but if they have liquid assets "savings, CD's, stocks" sure they will go after them.   They may garnish there wages to satisfy that debt.    We are not talking about a few thousand dollar right off but a few Hundred thousand, it dose become more likely they will go after folks owing money like that.    Another thing is these creditors will sit on the sidelines waiting for your parents to do well again them before you know it they come after future things,    Again most likely there home and cars are safe.

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Need Advice....lawyers, bankers, etc?

2 Answers