Posted by Tim Randle on September 16, 1999 at 08:08:33:
Thanks for the info. My post may not have been clear in that my question relates to whether or not I should do a L/O with sellers that are in Ch. 13, not tenant/buyers. I’m unsure as to how the bankruptcy may affect title transfer right now and/or down the road if
I were to do a L/O. Thanks…
Avoid L/O with Ch. 13? Need Advice, Please… - Posted by Tim Randle
Posted by Tim Randle on September 15, 1999 at 12:52:01:
I’ve had a fellow investor advise me that I should not do a L/O with someone who is in Ch. 13 bankruptcy. My bankruptcy knowledge is pretty limited and I wanted to get additional input from those more experienced.
Is the only smart way to deal with a bankruptcy to get the deed? How do I find out what “approval” powers the bankruptcy trustee has?
There’s a decent amount of equity in this property and I want to offer a solution that will work for both of us. I’ve already presented both scenarios to the sellers, but recently told them I probably would only be able to give them some moving money for transferring title to me. Thanks in advance for your responses.
Re: Avoid L/O with Ch. 13? Need Advice, Please… - Posted by Michael, El Paso, Tx
Posted by Michael, El Paso, Tx on September 16, 1999 at 04:11:21:
Okay… A Chapter 13 is a reconstruction of debt. That is when the courts take all of the debtors credits and arrange a payment structure with the creditors. Then the debtor will make an agreed monthly payment to the courts/bk trustee. My question to you now is how long have these people been in Chapter13? When did they file? and How much do they have remaining to payoff the Chapter13? You can have the prospects contact there trustee and have them request a “payment history” and/or “payoff”. Now most lenders I know of will credit grade based on the filing date when in Chapter13. They will also require the borrower to payoff the bankruptcy and to provide the “Bankruptcy Discharge Notice”. They will not lend while the borrower is currently in bankruptcy. It is possible for someone who has been in a Chapter13 bankruptcy to get 90% financing. Compensating factors would be: When they filed(usually for 90% financing they have had to filed at least 2 years ago). Also if they maintained some credit, meaning if they didn’t include all there debt in the bankruptcy. The reason for filing in the first place and of course length of employment, residential history, Debt ratio etc… I hope this bit of information helps you. If you have any questions please e-mail me. Take care and Good luck.
If filing is less than 1 year it usually constitutes a ‘D’ grade which means 55-60% financing.