Went bankrupt, now selling. Limitations?

General Real Estate Investing
1

I have a motivated seller wanting to sell her house. two loans, one main around 200k (2004), the other a heloc around 20k (2005). She went through a chapter 7 and is now allowed to sell her home. Due to the bankruptcy, the most profit she can take is 100k.

What are my limitations due to her circumstances? Can I assume the loans with a subject to? Would she be able to take the 100k as a partial loan, in monthly payments? Any suggestions on how you might structure this transaction? I am in a position just to close on it, but would like to avoid that route.

My goal is to fix up the home and resell. The house is in great condition, but aesthetically challenged on the interior, so I am looking at a full paint and carpet only. I figure a holding time of 30 days, but would count on more just to play it safe.

Thanks, and appreciate your advice,
Michael

2

Is her bankruptcy discharged? If not, she will need to get the courts approval to any sale that is going to take place. I doubt if they, or the current lenders, will allow you to take the house subject to.

How much is the house worth? Just because she can only take $100k profit does not mean she can sell a $225k house for $100k.

You could possibly see if the lenders would entertain a short sale offer. You can usually get a discount of 18 to 22 percent off the fair market value of the property with the first mortgage lender.

I would count 90 days as a hold time to be realistic. You also need a contingency plan in case the home does not sell in 90 days. It could happen.

Good luck!

3

Fred,

The 100k profit is over and above her outstanding loans.

Thanks for your reply,
Michael