Posted by JohnBoy on June 06, 2000 at 18:50:04:
The seller can sign all the written promises in the world and it won’t hold up in a BK. What will happen in my “opinion” assuming the BK attorney is on top of things, is the have the seller file not only against the note, but to also list the buyer in the BK also. This way, whether any promises or not have been signed, the seller will be relieved of any future potential lawsuits the buyer may possibly have against the seller. When filing a chapter 7, the BK attorney will tell the client to list EVERY possible thing they can think of that they may owe anything to and leave no stone unturned! Otherwise, if someone or something wasn’t listed in the BK, and after it is discharged, the creditor can come after you. At least that’s the way I understand it.
Also, I don’t think by putting the property into any trust, or any other type of entity would matter in the case of a BK. The reason being, no matter what is done with the property, the seller has personally signed the note to the lender and the lender has a right to foreclose on the property regardless of who or what owns it. It doesn’t release the borrower from being liable on the note without the lenders release except in the case of a BK or paying it off.
I wonder if anyone here has ever had to deal with this in a “subject to” deal where they couldn’t qualify to refinance and what the out come was??? Did the lender foreclose? Did they let the new owner assume the note or refinance them anyway? Did they have a tenant/buyer in the property to deal with that couldn’t get a loan yet? And what was the result in the end from all this? Anyone???