? for the ShortSalePro
In a recent posting you said that bankruptcy was the only way out for a specific homeowner. You stated specifically:
#1. Bankruptcy is probably a viable option for him to both stop the Sale, and to save his home with a Chapter 13 repayment plan. Of course, he would have to qualify for the Ch13.
Questions:
1) Can you explain how the bankruptcy would stop the sale?
2) How would a chap 13 repayment plan save the home?
3) What qualifies for chap. 13 bankruptcy.
The reason I ask is threefold.
1) This would seem a very bad scenario for the lender (i.e. keeping a non-performer on the books even longer), so I am wondering if the threat of the homeowner doing this [in the absence of a short settlement 
] would affect negotiations.
2) This homeowner in particular wanted to file bankruptcy months ago and was talked out of it by the lender, my question is are there legal/ethical implications to the lender here? Can those be used for leverage to offer a settlement?
3) Lastly, my agreement with the homeowner was to try to avert foreclosure for her. If I cannot get a settlement from the lender ( the lender is 50k upside down so my offer is around 75% of their 1st, so there is no guarantee that I can even do a deal here) then I need to do the right thing by the owner and help her keep her house even if I miss the deal.
Thanks in advance for your feedback,
Eric
My previous response said that your Seller would have to first qualify for a BNK. His income would have to be able to support the regularly scheduled payment, plus an additional payment representing the arrears payable over 36 to 60 months. Your follow up indicated that his income level was such that he would not be able to qualify for a Chapter 13 repayment plan. So, BNK is not a viable option, and would not 'save his house' from foreclosure. Generally, a homeowner (if qualfied) can utilize BNK to stop the foreclosure, have the loan reinstated, and make up the arrears via a BNK repayment plan.
In my experience, the threat of a mortgagor's bankruptcy has little impact on the negotiation process.
maikranz,
They can always file a Chapter 7 BK. They don't have to file a Ch. 13.
Depending on what state you're in, they may or may not be able to save their house by filing Ch. 7. I'm in Texas and a homestead is exempt from BK in Texas. You still have to make your payments of course.
A lot of times you will see whats called a Ch. 20. That's when someone filed for Ch. 13, then got behind on their BK payments again 6 months later, and then filed for Ch. 7 to liquidate.
Happy Investing,
Stacy Kellams