Deal with bankruptcy involved - Posted by Pat(IL)

Posted by Pat(IL) on July 11, 2001 at 22:37:10:

I am meeting with seller Thursday night I will find out what stage the bk is at. What do you mean by “They may discount if they are going to get their money”? I am not looking for discounts on either the 1st,2nd or backpayments (unless I can get them of course) I can flip it immediately and make a good buck with what they owe. I am going to try to buy the second at a discount, if the deal will fly.

I may be mistaken but I thought that if the bk was discharged all non-secured creditors were essentially wiped out, and secured creditors were left after they petitioned to be re-instated, at least that is what I am hoping for. I will let you know what happens at our meeting. Thanks for the advice

Deal with bankruptcy involved - Posted by Pat(IL)

Posted by Pat(IL) on July 11, 2001 at 10:02:56:

I have a seller with a house in foreclosure 120k on first 15k on second and 10k in arrears. house is worth 170k and I already have a buyer at 170k. Owner declared bk and included the house in the bk. He will not let me just cure the loan and keep it in his name, but that is ok since I have an end buyer already who will qualify. I offered $1500 in cash and he can stay in house for 1 month. I am also going to try to buy the 2nd at a discount. My questions are is the bk going to give me any problems if it shows him making money on selling the house? Also as far as setting up the contract the mortgage broker that I am working with is also not able to find a lender that will let me flip it that quick with that much profit even though it will appraise for the amount. Any suggestions on how to do the contract? Owner is willing to work with me. I was thinking of having him sign over POA and a warranty deed into escrow account. I would sign a quit claim and put the $1500 into the account then close with my end buyer signing for the owner and there would be no problem with the lender. But if I do that is the bk going to affect how much I am going to make? Any deal I make has to get through the owners lawyer also.

If stay has been lifted - Posted by Bud Branstetter

Posted by Bud Branstetter on July 11, 2001 at 12:18:06:

You don’t say what stage you are really at. If the automatic stay has been lifted you may be able to approach it a little differently. They are foreclosing anyway so they may deal. If they had a contract to pay them off at a title company and the attorney called them, they may pospone a foreclosure. They may discount if they are going to get their money. You still want to be having your attorney taking to the sellers bankruptcy attorney.

Re: Deal with bankruptcy involved - Posted by JohnBoy

Posted by JohnBoy on July 11, 2001 at 10:45:48:

BTW, the process to get the courts permission will take some time. First, the seller’s BK attorney will need to motion the court and they will set a date for a hearing on the matter. Then the court will send notice to all the debtor’s creditors where they can object to the sale. If a creditor objects then a hearing is set to hear the matter. If no one objects then the court will usually grant permission to sell the asset. This could take up to 3 months with no objections from any creditors and longer if any of them object. It also depends on the area you live if whether the BK court is local where the process moves along more quickly or whether if it’s out of the area where a BK Judge has to come to your county to hold the hearings. If they have to come to the county they may only come once every month ot two or three, depending on the area. That could drag the thing out for months! If they filed a chapter 7 it may be better to just wait until his BK is discharged. That usually takes about 90 days from the filing date. Again, sit down with his attorney and find out the best way to handle this.

Re: Deal with bankruptcy involved - Posted by JohnBoy

Posted by JohnBoy on July 11, 2001 at 10:20:43:

If the seller has already filed BK then you will have to get approval from the BK court to buy the property. The court will also most likely take any proceeds the seller would get to pay towards any of his creditors. Whether or not his homeowners exemption would allow him to keep anything or not I’m not sure on. Go sit down with the seller and his BK attorney to see what the best way to handle this would be. Once you file BK you cannot sell any assets without the courts approval.