Posted by JT-IN on September 16, 2003 at 09:02:37:
“What about the fact that it’s an arms-length transaction?”
The Debtor still has no right to circumvent collection action, or protection of existing Creditors ability to recover from his existing equity. The look-back privision allows the BK Judge to set aside a sale that gave priority in payment, or treated a Creditor unfairly, and that would be the case here… Essentially the Debtor is giving away equity in order to keep a Creditor from pursuing it.
“Would anything change if the seller agreed to take nothing?”
Except that when the home sells, there is no more Homestead exception. This would only apply if he filed, continued to own the home, then the Bk was discharged… along with all debts, then he sold the property.
“perhaps the investor could contact the trustee about purchasing the property?”
Yes, except that there is currently NO Trustee, as the Seller has not yet filed, the way I understood this. If he had already filed, and the case has progressed beyond the 341 meeting, (meeiting of creditors), then yes, contacting the Trustee with a proposal for a sale is the way to handle this. Although the Trustee would never ever approve a purchase at 50% of FMV… nor would he allow the seller to be pocketing money ahead of Creditors, except to the extent of any Homestead exemptions… as you mentioned.