I just found a property where the seller is in real trouble - she declared bankrupcty (Ch. 13 - restructuring) and now is about to lose her house to foreclosure. She is willing to deed the property over to me, but I’m pretty sure her bank has already done a forebearance agreement on the place (she has a set back payment fee coming up in a couple month) and is 3 months behind on monthly payments. The house is set to be sold at auction in 10 days, so I don’t think I have time to try a short sale. Also, it looks from the comps like she only has about $20K equity in the property and the back payments come to about $6K. Once I get the deed, isn’t the bankrupcty a lien (title search didn’t come up with anything) and can I give her money to move, etc.? This is in a hot market, so I’d ideally like to do a lease option on the property and hang on to it for a couple of years. Advice? Am I missing anything??
Hope I can help some here. Bankruptcy is not a lien but she will need a court order to sell the house or an order from the court dismissing the case. The bank also can not foreclose without same. They must have gotten dismissel or a lift stay if in fact they are going to foreclose in 10 days. If either of the two above has taken place then you can buy the house from her. The title company will need a copy of the lift stay order or the dismissal order.
Thank you so much! I am trying to get ahold of the bankruptcy trustee now. I know I can’t pay her anything when I buy it or it will void the terms of the bankruptcy, but depending on how much I sell it for, can I pay part of her bankruptcy as a way to get her some more value out of the deal?
Once the house is out of BK either by discharge, dismissal, agreed order, or any other court order, she has the right to sell it and keep what ever she can get for it and not give any money to the trustee. She can still be in BK with all her other debts etc. and the house can be out only and she still can keep the proceeds. Realize too the she has actually benefited from her equity by living there for months without making a payment, She does have some equity but not very much. Check all the numbers including taxes, other liens and judgements before paying out any money to the bank or her. You may want to help her by giving her enough to move out and get another place. Helping her will help you too.
Trustee is hard to contact too and you do not have much time so you may want to contact the clerk at the BK office and you will get the info right away. You may have to visit but you will be able to get the file and learn a lot about BK too.