Chapt.13 Court Approval for pre-foreclures?
I read something really interesting about Chapter 13 bankruptcy and pre-foreclosures buyer:
Q-Is it true that a pre-foreclosure buyer NEEDS a Court approval if s/he wants to buy a pre-foreclosure property directly from a seller who has filed a Chapter 13 bankruptcy??
Q- In this case, is it true that a pre-foreclosure buyer would loose all his money (paid to the seller) if the seller forgets (intentionally or not) to mention that he has filed for Chapter 13, because the Court would rule that the creditors have first rights on the debtor's equity in the home anyway?
Q- How hard is it to obtain a Court approval if I want to buy form a pre-foreclosure seller (in CA)?
I am in CA, but the questions seem to apply for the whole US (bankruptcy are Federal)
Thank you
Luc
Hey LUC!
I got you Pvt. Message--Will send you Parts 1 and 2 of the PAC Trust Article.
Here's the skinny on Chap. 13 Court Approvals:
Yes Creditors have first crack at equity (if any) of a Homeowner in Chap.13.
However there is NO NEED TO FEAR LOSS OF YOUR MONEY IN A PURCHASE.
WHY NOT??
Just get the BK Home Owner to First ask the Lender on the home to agree to your sale ONCE THEY DISMISS THEIR CHAP.13.
This is perfectly OK since CHAP.13 is a work out plan for wage earbers and NOT a total DEBT RELIEF (as with CHAP.7)
I ask lenders for a Forebearance or Modification of Mortgage 'Subject to' the BK Owner DISMISSING the CHAP.13
If the Lender agrees(we get this in writing) to a workout plan--they know tht the HomeOwner CANNOT Re-Enter a BK13 for at least 5 Years.
Not every Lender will agree and don't ever try to get it agreed to by the Lender's Attorney: They are paid to pick Fights not help you buy the home from the BK pre-Foreclosure owner.
AS you can see by following the above you can easily start to cherry pick from the public BK13 listings in your town to purchase many homes this way.
Special note:
CHAP.13 home owners are on their LAST LEG. They have their backs to the wall and the BK13 filing (for almost 99%) is the 'Slow-Burn' B4 the DEATH NAIL of STRICT FORECLOSURE.
This is because the Work Out Plan for the BK13 is only for the Arrears and the Home Owner MUST CONTINUE to PAY ACCORDING To Their ORIGINAL MONTHLY MORTGAGE LOAN TERMS + The CHAP.13 Amount (Usually Bi-Weekly).
Most of the BK13 HomeOwners have come face to face w/the HARSH REALITY of NOLONGER BEING ABLE TO AFFORD THEIR HOMES and You won't have a hard time convincing them of it.
Understanding these scenarios can help you break past the "Save my Credit from Foreclosure and ALSO MY House for me to Live in Ms. INVESTOR!"
NOT!!
I offer a Bailout (basic Vanilla)--never Promise that you can help 'em to stay or you will rue the day you did once they are back on their feet and sue you in court for taking advantage of them when they were down!!!
---Always Get them to sign an Equity Purchase Agreement+Bill of Sale + Estoppel Agreement (Hold Harmless)!
This will help you to sleep better at night!
Hope this Helps!
DERRICK ALI
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[ Edited by DerrickAli on Date 09/23/2002 ]