Re: Investing after Bankruptcy? - Posted by christine.mendenhall
Posted by christine.mendenhall on October 26, 2006 at 21:29:45:
In 2001, I found myself in a similar situation, I invested in another company, which was not real estate related, and lost just under 600K. So, not only did I take out mortgages for all my income producing properties, that were paying my bills at the time. Now, I had no way of getting it back, because the rents were now going to pay those mortgages rather than paying me.
Luckily for me, and I?m sure obvious to you, I had been investing in real estate (since 1999, when I did my first real estate seminar with CRE in, I say Dallas, my sister, who came with me, says Atlanta) Nonetheless, There I learned how to manage a homeowner who was in trouble, possibly losing their home and/ or facing BK and making that situation into a profitable transaction for all parties.
I knew the laws for foreclosure in Illinois, I knew it would take at least 11 months for them to take my house and I knew that all I needed to do was concentrate on creating the money to make my house payment, and the general expenses of living?I also knew that not only did I have the 11 months I would have the option, if I need it, to create another 3 month ?stay? by filing a chapter 13. That?s easy, we?re investors. Now, I am going to buffer that with, I would not and did not do anything illegal, just as any good business person does, I educated myself about the laws that pertained to my situation at the present time and while walking inside of those lines, saved my own ass, instead of someone else?s.
The only solution for me, was treat myself as a client, and that’s just what I did.
I called around to all the investors in the paper, found the ones who would clean up my arrearages with the bank (on my personal residence only) And then, lease option or owner finance my property back to me. This allowed me the great advantage of being able to switch my chapter 13 to a 7. (Chapter 7 goes on for about 2yrs 3months here in Illinois before it’s discharged, chapter 13 goes on for 5 years active while you pay back you creditors and then another 2 years after you’ve been discharged before you can even begin rebuilding your credit. I?m going to throw in another small disclaimer here, I did this in 2001, BK laws have changed. I have worked with the new BK laws when managing my current clients. And, I have not had the “personal” experience of them. I am speaking from my personal experience before the changes. Which may or may not, effect this situation one way or the other.
Anywho, to keep this long story short I?ll cut to the end. Eventually, I ended up selling the house to my sister, which was easy, she had decent credit and purchased it as a rental/ investment piece. ( if that had not been an option I would have moved forward with one of the other investors I contacted) I paid her the rent every month and two years later, I purchased the property back from her. I did file chapter 7 immediately after the sale to my sister went through. Allowing me to get rid of my debt and move forward.
Last point, I was able to buy myself 14 months to create money, doing real estate deals with people who were in my same situation; And let me tell you, my experience was that they would much rather hear from someone who was sitting in their shoes and willing to admit it. Which, I did in every letter I sent. My clients ended up feeling far less intimidated and much more comforted by the fact that I knew what it was like to be in their situation and I was not passing judgment, and we had instant ?report?. They could be completely straight with me. And, having been through it, I knew exactly how to handle their situation.
5 years later, I?m still in the business, mainly doing short sale deals, I have great credit which I have had for several years and I am far better at what I do now then before this happened.
So go forth and fight my fellow Illini, there is plenty of time to turn the tides in your favor.
Best of Luck and feel free to contact me if you need to,