Posted by luke-NC on October 02, 2003 at 06:41:24:
you will have get permission from the trustee handling the case or wait and see if they get discharged.
Seller in Bankruptcy Question - Posted by Rich(WI)
Posted by Rich(WI) on October 02, 2003 at 05:32:46:
I got a call from someone with a house that is worth at least 125K fixed up. I can do all of the repairs myself with little out of pocket money. I was hoping to do a sub2. I would possibly concider a lease option because of the small amount of out of pocket money needed to fix it up. The problem is the owners filed for bankruptcy last month (don’t know which chapter yet). Am I still going to be able to do this or am I going to be wasting my time. I was hoping that someone on this board would shove me in the right direction. Any other ideas on how to pursue this would be greatly appreciated.
Thanks,
Rich
Re: Seller in Bankruptcy Question - Posted by B.L.Renfrow
Posted by B.L.Renfrow on October 02, 2003 at 10:04:07:
I’m not sure if the archive feature is working, but this is discussed several times weekly, so try doing a search on bankruptcy and see what comes up.
What Luke-NC says is correct – once the BK petition is filed, the debtor cannot sell, lease or otherwise dispose of the property without permission from the trustee.
The trustee’s main concern will be to see that any significant equity in the property goes to the debtor’s creditors, not to the debtor. Therefore, the trustee is unlikely to approve any deeply discounted sale, unless the proceeds would be enough to satisfy all the creditors. In addition, it’s my understanding that trustees will never approve an owner-financed or subject-to sale, but will, in some circumstances, agree to a lease option. Of course, there are other factors involved, such as the specifics of the individual debtor’s case, the state exemptions, type of BK (ch 7 vs 13), etc.
If the BK is discharged or dismissed, then you are free to make whatever deal you can with the owner. Also if the debtor is delinquent on his mortgage loan, and files chapter 7 or files 13 and misses any payments, the lender will probably file a motion for relief of stay in order to proceed with foreclosure and sale.
As you can see, it’s a fairly complicated area…certainly not impossible to get a deal done, just more hoops to jump through. You can either talk to the trustee yourself if you are confident about your knowledge and what you can do. Or, if you have an attorney familiar with the bankruptcy system – and many aren’t – have him or her negotiate on your behalf, since the trustees are lawyers and may respond more readily to another lawyer who knows the system.
Brian (NY)