Bought Subject to AFTER Bankcruptcy... HELP!!! - Posted by Detroit_newbie

Posted by William Bronchick on July 13, 2002 at 22:46:42:

Nothing happens until someone balks. You get making payments to the lender and everything will likely work out fine.

Bought Subject to AFTER Bankcruptcy… HELP!!! - Posted by Detroit_newbie

Posted by Detroit_newbie on July 12, 2002 at 12:27:23:

Hello fellow investors,

I need some input from the rei group here.

I thought i bought a home subject to the existing financing. So, i start to clean up the place and do some minor repair work. I even ordered new carpet.

I contact the Gas company to have them switch billing. They tell me to come downtown and talk. What?

I contact the Electric company to have them switch billing. They tell me to come downtown and talk. What?

I contact the Wter company to have them switch billing. They tell me to come downtown and talk. What?

I start to catch on…
I think this guy owes some people a lot of money.
I wonder if he filled bankruptcy.

HE filed bankruptcy in October 2001.
He signed papers with me in May 2002.

This seems like it ain’t a deal anymore.
kind of like he sold me the broklyn bridge.

Can he deed the house legally after bankruptcy???

Can he lease option the house after bk???
(i got to get in or out of this deal)
I’d prefer to get in and make money,
or stay out and keep what i got in the bank.

Any help would be appreciated

Detroit Newbie

One more thing . . . - Posted by William Bronchick

Posted by William Bronchick on July 12, 2002 at 19:29:39:

And JT-IN is right . . .

I did cover all of this in my “Million Dollare Secrets of a Real Estate Lawyer” seminar in Las Vegas. And yes, it was videotaped and will be available in a month or two.

Not a big deal . . . - Posted by William Bronchick

Posted by William Bronchick on July 12, 2002 at 19:27:58:

If the seller filed for BK (assuming a Chapter 7 liquidation), it may not be a big deal. Once a person files, all of his assets become part of his bankruptcy “estate,” which is under the dominion of the bankruptcy trustee. In theory, no asset can be sold without permission of the trustee. In theory, the trustee can have any sale or transfer overturned as fraudulent (defrauding the creditors of the debtor).

Now, the reality. In most cases, the debtor has no equity in the house and a bunch of credit card debt. The credit card debtor will likely write it off as a loss. The mortgage company cannot accept payments from the borrower, BUT, they are free to (and will) take payments on the note FROM YOU. If you contine making the payments, the lender will not foreclose.

If you feel queasy about proceeding, go to the bankruptcy trustee and get written permission to take the property - he will likely give it to you.

Re: Bought Subject to AFTER Bankcruptcy… - Posted by JT-IN

Posted by JT-IN on July 12, 2002 at 18:20:26:

DN:

You got a big problem here, and you need to stop spending any money related to things such as new carpet, paint or beautification, as you may be doing so for someone elses property.

it is hard to believe that the Title Co. missed this glaring info in their title search. What exactly did you ask the title co to do for you…? If they were doing a search, knowing you were going to buy this thing, then they dropped the ball big time!

No, the proeprty owner cannot sell you this house and offer you clear title, after filing BK, unless the BK has been discharged, or the asset has been released by the Trustee for transfer. You must get this clarified immediately. This may be an expensive lesson to learn here.

" I AM GOING TO PREACH A LITTLE BIT HERE, SO SUCK IT UP AND LISTEN"

Some folks hate to spend money on buying a course, or be told that the lack of education is expensive. Soem of these same folks want someone to hand them only the desired and necessary answer at the moment, and not all the extraneous details… Well, guess what, it costs money when you act and DON’T KNOW…

There is not substitute for education. You will pay the tuition one way or the other, and I advice paying in advance, versus in the manner that you are about to pay tuition; in the form of heartache and loss over inexperience and acting out of ignorance of the subject matter.

Sorry for the rant, but I can’t contain myself, after hearing so many people get ticked about warning newbies of the ills that lay before them, as if an experienced investor is attempting to run them off. Not at all, just warning against the follies of what you are now experiencing, or better yet, will experience, before this is over.

Best of luck on this problem, but solve it before you go one step further!

Just the way that I view things…

JT-IN

Archives - Posted by Hank

Posted by Hank on July 12, 2002 at 14:47:36:

Plug in “Bankruptcy” and lots will come up.
Also try:
“BK”.
"Chapter 13"
“Chapter 7”

Matter of fact, Johnboy answered a BK question of mine a day or so ago.

Re: Bought Subject to AFTER Bankcruptcy - Posted by Mike Jackson

Posted by Mike Jackson on July 12, 2002 at 12:42:38:

I’m still very much a newbie to re investing, but this deal doesn’t sound good. I don’t know about bankruptcy laws so I would be very hesitant in this deal. Hope it works out well for you either way. Have you done a title search?

Sucked Almost Dry by Guru Joe - Posted by Detroit

Posted by Detroit on July 13, 2002 at 19:32:03:

JT,

It’s hard for me to suck it up. I’m trying though I know you need to rant… and you do some times. I’ve been reading from this site for years now.

I need to rant too myself right.

I’ve bought courses, Ron Legrand stuff, ABC’s, Conti and Finkell and other “no name people”. I’ve even been to overpriced “bootcamps.”

Yes, i used the term “newbie” because i don’t own but a couple of homes. So, compared to you and the guys that got my money, I’m a newbie.

I don’t own any of Bonchick’s, but if i can keep my headup, i’ll own one by my birthday.

Maybe i’ll see you at next years conference :slight_smile:

Detroit

Ps Sand in my eyes stings. next time Please don’t rant. You’re a much kinder person than that or am i worng? Maybe it was the summer heat? I still love you as my REI brother :slight_smile:

Re: Bought Subject to AFTER Bankcruptcy - Posted by Mike

Posted by Mike on July 12, 2002 at 13:21:57:

Straight from the school of Hard Knocks as Ron LeGrand would say. Next time do a Title search. That would have notified you of liens and judgments!

Re: Sucked Almost Dry by Guru Joe - Posted by JT-IN

Posted by JT-IN on July 14, 2002 at 01:30:59:

DN:

The reason that it is important for me to rant here, is not to you, or at you, but to the newbie that may be reading this post… wondering what difference it makes if the seller has flied BK recently, or not.

Don’t you wish you would have read a post like this one 6 months ago. If you did, and it stuck with you, you wouldn’t have made this error in judgement on this deal.

What you need to do is to contact the Trustee, see what you need to do to get a release of the asset from the proceedings. As Bronchick had said earlier, it may not be too difficult, as there is likely very little equity in the property. If that is the case, the Trustee should cooperate, if not for your benefit, but to minimize his/her workload. By relaesing this asset, it is one less thing that they must deal with. Now if there was a lot of equity, then you can bet that the Trustee would not, and should not release the asset, based on the protection of the rest of the creditors of the debtor. Also, I think that it is key to understand that the Trustee has some far reaching powers here, and could… and the key word is could, take this property from you, and you would have no recourse for anything that you have spent in fix-up or deposit costs. We’ll hope that the lesson isn’t quite that harsh on you.

Hopefully you will learn something about due-diligence in this deal… and I am certain that you will remember this deal 20 years from now. See what a good lesson this will be, especially when it is past tense.

So don’t worry about me ranting, and it was not intended at you as much as it was for the general populous who reads some of these posts. Sorry that you took some of the Cannon fodder personally, and I can see how you would.

Yes, I’ll look forward to meeting you at the next convention. I’m sure that you will agree after we meet, that I am just a harmless teddy bear in disguise of a big bad real estate investor… Let me know if I can assist you in getting things cleaned up with this deal… should you need any advice after speaking to the Trustee, just email me.

All the best…

JT-IN

Re: Bought Subject to AFTER Bankcruptcy - Posted by Detroit_newbie

Posted by Detroit_newbie on July 12, 2002 at 13:29:30:

Actually a Title search was done on the home. The Title company sent me some paperwork all about the house, showing some liens and change of liens (seller refinanced). Before any papers were signed. Nothing about a bankruptcy came up.

What can i do next time???

Re: Bought Subject to AFTER Bankcruptcy - Posted by William Bronchick

Posted by William Bronchick on July 12, 2002 at 19:32:37:

Title companies don’t generally check for BK, which I have always said they should (said it in my “Nuts & Bolts” course, which has been in print since 1997 - always check bankruptcy records). It’s also not a bad idea to check family court records for divorce decrees if you are dealing with a spouse that is separated.

Re: Bought Subject to AFTER Bankcruptcy - Posted by JT-IN

Posted by JT-IN on July 12, 2002 at 18:08:43:

D.N.:

Go back and ask your Title Co. what they found in reference to the BK, when doing the title work. Surely they did not miss this, but if they did, they are responsible to you for this ommission.

Then next time, use anouther title company.

JT-IN

Re: Bought Subject to AFTER Bankcruptcy - Posted by Percy

Posted by Percy on July 12, 2002 at 15:08:44:

Two suggestions:

  1. Ask the seller if they have filed BK in the past 12 months.
  2. Look up the BK filings at http://pacer.psc.uscourts.gov

Seminar Grands Only… Bought AFTER BK - Posted by Detroit

Posted by Detroit on July 13, 2002 at 19:14:51:

So Now what?

Am i stuck?

Do i even own the home or does the bankruptcy courts?
Can i convert it to a lease options?

How long does my TB have until they get thrown out of the home by some baliff?

Any advice what be very helpful

Detroit

Ps. Wow, what a Seminar we are having this week :frowning: