Bankruptcy
I subscribe to a foreclosure listing. After researching some and looking at the court documents, I noticed that some people going through foreclosure have filed for bankruptcy. Can I still purchase the property from someone going through bankruptcy? If not, what happens to the property? Is there any way I can still purchase the property and who would I contact to do this?
Bankruptcy is a Federal Court protection that stops the auction temporarily. It allows the owner to make Trustee payments in addition to their regular monthly payment. If they miss either payment, the lender will proceed with a motion to lift the stay and begin the foreclosure process again and auction the property.
If the individual wants to sell the property, they will need permission from their bankruptcy Trustee who will want a copy of the contract of sale. If they believe that the price offered allows you to take control of the equity in the property, they may reject your offer. They will want some if not all the equity in order to satisfy the other creditors included in the bankruptcy.
If you and the owner have come to an agreement, they can withdraw their bankruptcy or have it dismissed to allow the property to go to settlement. I suggest that this NOT be done until you know for sure that it will settle within 48 hours of the dismissal since the lender will be monitoring any changes in the status of the land records and could proceed with the auction before you get to settlement.
Hope this helps.
Barbara
Hi Barbara.
Is missing Trustee payment or regular payment during BK the pre-requisite for lenders to file the motion to lift automatic stay and request being granted?
Thanks in advance.
[ Edited by whyK-CA on Date 02/01/2005 ]