Opportunity And BK Question.
Here is the scoop:
The guy has 3 houses in foreclosure, MANY months behind in payments. Two of the houses are with the same lender….
The auction is set for July 1st.
He told me he is filing for BK this week to stop the foreclosure sale. (His choice he’s set on doing it.)
My situation is this: I’m under the impression here that once he files, his assets are frozen for 30-45 days. No one can pursue seizing them for collection nor can he sell them (SS). After the 30-45 day freeze the lender then has to re-issue a sale date for his houses. (usually another 30 – 45 days). This would give me plenty of time to put together a package, get the place inspected, appraised, and have estimates done for the fix ups.
The guy wants 0 money. He is willing to do anything I ask to rid him self of the properties. I’m more than willing to help this guy solve his problem. Do you guys know of any hang ups that will prevent me from ultimately acquiring these properties from him due to the BK filing?
Thanks in advance.
I'd try to establish a pre-bankruptcy rapport with the mortgagees.... and get as much info as possible, also laying the foundation for a short sale(s)
Perhaps, if your preliminary Proposal is compelling, they'll agree to postpone the foreclosure sales.... thus eliminating the need for the Homeowner to file...
Once he files BNK the mortgagee will be precluded from entertaining a short sale.... unless/until the bankruptcy trustee abandons it's interest inthe property, and/or the bankruptcy is dismissed or discharged (don't know where you got the 30 to 45 day idea).
Only afterwards, once the automatic stay has been lifted can your Proposal be considered.
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 06/24/2004 ]
You lost me when you said:
“Once he files BNK the mortgagee will be precluded from entertaining a short sale.... unless/until the bankruptcy trustee abandons it's interest in the property, and/or the bankruptcy is dismissed or discharged”
And not sure what an automatic stay is.
If you have time and don’t mind could you please go into a bit more detail on what exactly you were saying? For the dummies like me.
I got the 30-45 day thing from the seller actually. He had visions of becoming an investor him self (rehab) and ended up buying the 3 houses with the intention of fixing them up and selling them again. However, he fell onto bad times and he is now in the situation he is in… So what he’s telling me could be WAY off base
I've posted at least a dozen responses re BNK and short sales. Maybe reading them will help answer your question.
The essence of it is:
lenders are precluded by federal law to engage in debt collection activities while the mortgagor is in bankruptcy...
negotiating a short sale is considered a debt collection activity.
For the mortgagee to consider a short sale proposal, the bankruptcy trustee would have to abandon it's interest in the property and release it from the bankruptcy estate, and/or dismiss the bankruptcy.
Most lenders abide by the law. Some do not, or are simply ignorant.
OK thanks, that clears it up some.. I will certainly be doing some more digging around.
Once Bankruptcy is file the lender has to get the court's approval to foreclose the property (relief from stay). This process can delay things 30-45 days.
I agree with ShortSalePro it is better to deal with the lenders now, it takes quite some time just getting to the person who can say yes.
Good Luck
See if the lenders will agree to delay the sale on threat of bankruptcy. They don't want to go to Bankruptcy court and it can give you time to negotiate with them.