Bankruptcy and Subject to

Tried to post this on the legal forum but I’m having technical difficulties;

I purchased a home in 2004 “subject to” and have kept the seller’s loan in good standing for nearly 8 years now. My tenant tried to buy the home from me in 2007 but because of the lending melt down it just didn’t happen. The tenant currently rents month to month.

The original seller called me and said that he’s claiming the home loan in his bankruptcy. What does this do to me? I’m assuming the lender will foreclose even though payments are current and the account is in good standing. Uncharted territory for me and I appreciate your help!
Rsims

Nothing will change

Since lender’s loan is being kept current by you, that lender’s loan isn’t going to change a whit.

I’ve seen and been involved in props like this where all legal debtors had filed CH 7s and absolutely nothing changed since loans were kept current and paid monthly by house buyers.

[QUOTE=John Merchant;884256]Since lender’s loan is being kept current by you, that lender’s loan isn’t going to change a whit.

I’ve seen and been involved in props like this where all legal debtors had filed CH 7s and absolutely nothing changed since loans were kept current and paid monthly by house buyers.[/QUOTE]

John,

Let’s discuss this a bit further.

I am reading between the lines a bit when I hear what you say. I would expect the lender is not really able to call the loan due. At the same time the BK process clearly will impact the seller’s position if they retain any stake in the property. If the property was sold subject to and the title was transferred then they really do not have a stake in the property, just in the loan.

How should the person who bought the property years ago act in terms of the BK? They have an interest of some sort in the BK process.

Guess I just dont understand

I guess I don’t understand the BK process. If original seller claims the loan in the BK, that loan effectively goes away. Lender still has the deed of trust so if payments stop, they can foreclose. But if payments don’t stop they cannot foreclose. Does that sound right? Thanks guys!