Texas Home, Bankruptcy

Random Ramblings
1

Hello all,

Need help…

I’ve got a very motivated Texas seller that needs to get out ASAP. 4 bedroom 2 bath about 1600 square feet. Good schools good neighborhood. The home can be sold retail at about 116 to 118k+. She owes only 25k. Everything in the house is original including the carpet paint etc. So just some carpet paint & touchups are needed.

The reason she is selling is because her husband went to prison and she cant afford the house anymore. She’s about 3 months behind on mortgage & owes about $2000 or more on taxes. The home is under her husbands name but she has power of attorney. She has also filed chapter 13 bankruptcy but she says the attorney may be changing it to chapter 7.

So my question is…

Will the bankruptcy be an issue for me to get it under contract and assign or double close it to an end buyer? Or will it interfere with the equity in the home? Im assuming it wont since Texas’ homestead exemption can be used to protect an UNLIMITED amount of equity in a home, limited only by the amont of acreage on which the home is located. Not sure if Im asking the right questions. So please anybody, feel free.

P.S.
Also, if the bankruptcy wont be an issue, what do you all feel is the best way to do this deal?

2

Hi,

Well Blue Moon answered you correctly in the beginners forum, however Texas state homestead exemption only protects the Texas resident from losing a property to creditors or lawsuits. It does not protect the equity in the property from Federal Bankruptcy protection as the Federal law only allows someone to keep their primary residence with less than $25k or $30k equity.

The amount of equity exceeds Federal protections so it will probable be sold by court order and a trustee assigned to liquidate the property at a retail value.

Keep in mind Texas state law is state protection and Federal Bankruptcy law is Federal law and federal always trumps state.

No your seller can not sell the property while in bankruptcy or 6 months before a planned bankruptcy.

                 GR