Chapter 7, 13 Bankruptcy and Real Estate? - Posted by Kaity

Posted by John Merchant on August 03, 2007 at 09:23:41:

Natalie I’d try that to see how your local T’ees feel about that approach.

Before any Trustee’s ruling or decision, that T’ee will, of course, “notice” the BK petitioner and then hold a courtroom hearing to give all sides a chance to present their positions; therefore the BKP would get the opportunity to put in his 2 cents

But in the end it’s the T’ees decision whether the BKP likes it or not.

Remember too that the T’ee hears an endless procession of BKP’s moaning and groaning about how they’re so “put upon” and maltreated by the system so the T’ee should allow them to stay in the house FREE, etc., etc., etc.

So if you’re offering a cash solution to some of the T’ee’s perpetual money search, I think you’re going to be welcomed.

Chapter 7, 13 Bankruptcy and Real Estate? - Posted by Kaity

Posted by Kaity on July 16, 2007 at 11:26:35:

Hi,

I’ve come across a few properties listed in Ch. 7/13 bankruptcy in California that I’m interested in buying.

My questions are:

(1) How is the process of sales handled for these?
(2) Do I contact the trustee or the attorney for the owner, or the owner him/herself?
(3) How long does the process take if my purchase offer is accepted? (courts being involved and all).

I’ve never dealt directly with properties in bankruptcy - and am playing voice-mail-tag with both attorneys and trustees (oy vey!)

Thanks in advance,
Kaity

T’ee “owns” RE in BK - Posted by John Merchant

Posted by John Merchant on August 01, 2007 at 12:09:52:

When a title owner files Ch 7 or 13, he’s just handed all control of his RE over to the BK Court Trustee and the title owner no longer controls anything.

So just make your offer to the T’ee in writing along with your “package” showing the T’ee why your price and terms are fair and should be accepted and you’ll get a response from that T’ee.

My clients and I have had many such offers to BK T’ees accepted, sometimes at what seems to be ridiculous prices, so don’t be afraid to ask.

The T’ee has as his primary job the finding of money among the BK’s assets to satisfy the creditors-and if you’re helping him do his job it makes his job simpler.

Re: Chapter 7, 13 Bankruptcy and Real Estate? - Posted by Natalie-VA

Posted by Natalie-VA on July 18, 2007 at 06:08:52:

I’ve bought a few houses where the owners were in a chapter 13. I had to strike a deal with the owner first, and then get BR court approval for the sale.

–Natalie

Re: T’ee “owns” RE in BK - Posted by Natalie-VA

Posted by Natalie-VA on August 02, 2007 at 05:55:46:

John,

Wow! That’s very interesting. I didn’t realize that you could deal direct with the trustee in a chapter 13. Do you even need to have the owner on board? I assume I would need to check their BR file to see if their mortgages are included in the BR, right? I’d like to learn more about this.

–Natalie

Title owner out of loop - Posted by John Merchant

Posted by John Merchant on August 02, 2007 at 17:27:46:

Check the BK court file which is public info and can be checked out over the counter and read by anybody, but just know that even if the BK’s mtgs were omitted, those debts are likely still going to be discharged by a Ch.7.

Of course since the 13 is going to be “workout” of his debts and not just a straight discharge, his mtgs and mtgd properties are certainly going to be examined to see what equity he has in them.

But, under BK law, either Ch. 7 or 13, ALL the BK’s debts are included in his filing and he cannot exempt such debts even if he deliberately omits listing them.

I had some little correspondence with Wm Bronchik on this issue a year or so back and as I recall we pretty much agreed that this was/is the law.

And I did some little courthouse BK law briefing and remember learning that in a BK case or two in which I had some interest either as a C’or or possible buyer of such, that even those debts that had most likely been deliberately omitted by the BK, WERE included and discharged by the BK Discharge.

I remember one odd case where the BK (who’d been a bonded Securities Rep) had been found guilty in a civil lawsuit of committing some fraud or other and thus violating a surety bond on himself, thus the bonding company’s liability on the bond…although he intentionally omitted listing that debt and thus did NOT notify the Bonding Co, the law was it WAS also discharged so he was able to walk out of BK court wih ALL debts discharged.

If that bonding co. had known about the BK’s filing or that he intended to get a discharge from their J against him, they would have fought that to the death…but not knowing, they didn’t even get the chance to contest it.

If you do find that the BK has omitted listing his mortgaged property, then your telling the BK Trustee about same will get that BK petitioner jerked before the T’ee on a contempt action and make the T’ee focus on those properties which might really work for you.

Also just understand in the typical run-of-the-mill BK filing today, the title owner/BK petitioner is the least important person in the courtroom and his opinions or alleged intentions carry no weight. He’s sure not going to be one who decides if or how to sell his properties or pay his debts.

Re: Title owner out of loop - Posted by Bob Smith

Posted by Bob Smith on August 04, 2007 at 14:04:09:

That’s really weird. I could have sworn that any debts that are omitted by the debtor are not discharged by BK. I wonder if those debts got discharged, despite the omission, because the BK judge decided that the creditors in question knew about the BK.

Re: Title owner out of loop - Posted by Natalie-VA

Posted by Natalie-VA on August 03, 2007 at 06:19:23:

John,

Thanks for taking the time to post. I have access to Pacer. I’m wondering if you can just pull everyone that files chapter 13s and make offer to the trustee for their real estate. I hear you saying that the petitioner is the least important person involved. Would the trustee care that they still live in the house and might try to keep it?

I’ve always thought that the deal was dead in the water if I couldn’t get the homeowner in agreement. Now you’ve got me wondering if there’s another way in.

Thanks for your thoughts.

–Natalie