Posted by Brent_IL on October 15, 2003 at 12:48:54:
From what I understand, creditors get left off of the list frequently. That why some debts aren’t dismissed and come back to haunt the Debtor.
If you are paying one guy at the expense of others, they definitely will object. It’s kind of hard to conceal a house payment.
The Trustee would have to allow some sort of allocation for a housing payment.
Bankruptcy on a Subject 2 - Posted by k(fl)
Posted by k(fl) on October 14, 2003 at 19:10:33:
I actually read a question on another site and became very curious,what happens if a seller files bankruptcy after the home was purchased thru a subject 2 deal?
Re: Bankruptcy on a Subject 2 - Posted by Eric - GA
Posted by Eric - GA on October 14, 2003 at 21:13:45:
Just instruct the seller not to include the mortgage in the bankruptcy. If you’re living up to your commitment, making the payments, they would have no reason to include it anyway.
Eric - GA
Legal question Bankruptcy - Posted by Terry (Houston)
Posted by Terry (Houston) on October 14, 2003 at 21:19:32:
I think that if a person leaves off a debt that they have signed for they can get into big trouble by not including it.
We might want to get a lawyers thought on this before giving the wrong advice.
Terry (Houston)
Re: Legal question Bankruptcy - Posted by Jim FL
Posted by Jim FL on October 16, 2003 at 16:10:11:
Terry,
Definitely a question each individual needs to ask their BK attny.
I know there are different chapters, and different procedures etc.
Personally, from many years ago, I filed one, before finding REI, and we included mostly high credit cards, and left our home loan in place.
I cannot remember what they called it, something like, “Reclaiming” or some such term.
Basically, we let the smaller debts go that got us in trouble, kept our house and car loans in tact, making payments on them.
It was sad, because immediately upon discharge, ALL kinds of offers of new credit came around daily.
No wonder folks get into trouble so easy these days.
Thank goodness I found this business before I re-applied for some more plastic.
Anyway, loans can be left out of a BK, at least under what I seem to recall is called, “Chapter 7 BK”.
Also, on the original point, I have a few houses where my sellers later filed BK, included the home loans we took over, without notifying us.
The lenders continue to take the payments, and the only recourse to the lender, is to foreclose and take the collateral, not against the original barrowers credit, since the debt was discharged in BK.
Never had any noise from lenders, and I love these.
They are homes I won’t mind holding for a while now.
I sent in one payment on a particular house like this one month, on like the 7th, when I usually mail them on the 3-4th.
I got a letter from the lender, reminding us to send our payment, and if it had already been sent, to disregard.
At the bottom of the letter, was the little “Fair debt Act” language, with something added.
It stated that since this debt was included in a personal BK, any efforts to collect the debt were not against the barrower personally, but against the collateral that secured the debt.
I ran that by my attny, and he said, “yup, just what it says.”
Honestly, I no longer panic if a seller wants to file a BK later on and include the house.
As long as the lender still takes the payments, cool.
Just my two cents,
Jim FL
Re: Legal question Bankruptcy - Posted by E.Eka
Posted by E.Eka on October 15, 2003 at 09:26:33:
The person filing for bankruptcy will only get in trouble if they leave off a debt that they want to be forgiven or want to be protected from.
If you file bankruptcy, you can chose what debts you want to include because the filing of bankruptcy is for protection. if you still think you can pay a certain bill, the creditor doesn’t want you to file, and the trustee won’t have a problem with it as well.
Re: Legal question Bankruptcy - Posted by Tim- chi.
Posted by Tim- chi. on October 16, 2003 at 16:43:05:
Jim-FL,
I agree with much of what you said, however I want to be sure the original poster understands. Terry was addressing others who posted suggesting that a debtor can pick and choose what he lists in the bankruptcy. A debtor must list all assets and all liabilitites. Creditors will be treated differently depending on whether they’re secured or unsecured. A debtor may choose to keep his home, car etc. if he continues to pay- but if there is equity he must pay that out in the bankruptcy. The Trustee will determine if there’s equity after recognizing any exemptions the debtor may have and using a quick-sale value (usually 80% of fair market).
The original poster also asked if there is any potential problem if a sub-to seller files bankruptcy after deeding over the property. There may be. The debtor will be asked if they have recently sold/tranferred any assets. If so, the Trustee will scrutinize the transaction to determine whether there was equity that was transferred in anticipation of the bankruptcy. If the Trustee wants he can void the transaction- Trustees have broad power in this area.
Tim
Re: Legal question Bankruptcy - Posted by Tim- chi.
Posted by Tim- chi. on October 15, 2003 at 11:32:48:
I agree with Terry. The debtor cannot choose which assets/liabilities to include in the bankruptcy. He will be required to list all assets and all liabilites. The debtor cannot favor one debtor over another. Creditors will be treated differently according to whether they’re a secured or unsecured creditor, but it’s essential that the debtor disclose what they own and what they owe so the court may determine their ability to pay.
Re: Legal question Bankruptcy - Posted by Terry (Houston)
Posted by Terry (Houston) on October 15, 2003 at 09:30:16:
I have been told that everything has to be listed but that you can continue to make payments on certain things. But if you do not list everything the other creditors can throw a fit about it. (those are my words 
This was by a lawyer so I hope he knows what he is talking about. I hope some legal eagle sees this and pipes in.
Terry
Re: Legal question Bankruptcy - Posted by E.Eka
Posted by E.Eka on October 15, 2003 at 09:29:52:
Also, there are certain conditions that need to be there before a person can file for bankruptcy, one of which is that the debtor is unable to pay his debts as they come due. That condition as well as others need to be met before he/she can file. If the mortgage payments are being made on a timely basis, then there is no default nor is there a reason to include the mortgage in the list of debts.
Eric touched on that point.