Posted by JohnBoy on November 21, 2004 at 20:58:04:
You can’t. It is part of the risk you take. If someone decides to file BK there is nothing you can do about it. But the risk isn’t any different than if the lender finds out about the transfer of the property. If the lender finds out they have the right to call the loan due.
Your only problem in this case is if the lender finds out and elects to call the loan due. Then you have to deal with it. Refinance, stall off the foreclosure if you can’t refinance, get your buyer to exercise the option and pay the loan off, etc.
If you do not have the means to refinance when something like this happens then you shouldn’t do subject to deals. This is a risk you take buying property this way. Putting the property in a trust does not prevent a lender from finding out. It only helps to hide the sale to help prevent them from finding out. But sometimes they still find out. Sellers sometimes slip up and inform their lenders. They decide they want the loan out of there name and think by telling the lender it will force you to refinance. They sometimes file BK as in your case with your deal. There is no bullit proof way to prevent a lender from finding out. You can only take steps to help keeping the lending from finding out.
But in most cases, even if the lender finds out they won’t pursue it if the payments have been made on time and loan is current and the payments are being made. They may threaten to foreclose by trying to call the loan but when it comes down to it they won’t pursue it by foreclosing if you ignored them and continued to make the payments. In some cases they may still pursue it. You have to be ready to deal with it if they ever did pursue it.