Bankruptcy and Foreclosure
What happens when someone in foreclosure is filing bankruptcy? Does the bankruptcy stop the foreclosure briefly? Are these type of deals good to pursue, or would the owner filing bankruptcy stop the investor in their tracks?
Janis 
Hello Derrick Ali,
I'm doing well. and hope the same for you.
Thank you for your reply. My question on this is when you wrote: "If they say YES only if the BK is dismissed FIRST then get them to put it (the workout offer) in writing b4 having your owner to dismiss the BK."
Would you please rewrite this. I'm not sure I understand the sequence of this sentence. My apologies. I'm a little confused about this bankruptcy stuff. Also, I believe this would be a bankruptcy 13.
Is there a certain percent of ownership that is appropriate? How would you create your ownership on paper. And I'm assuming you would record this ownership?
Janis
It only postpones foreclosure.
Joel,
Thank you for your reply. Being that it postpones the foreclosure, leaving more time for the homeowner, is there a creative way to help them the home owner out considering they are a single person with four children and would like to stay in their home?
Janis
I could be wrong, but I'd say the only way for them to stay in the house is for you to buy it and rent or lease option it back to them. My thought is that they are most probably going to go to the courthouse regardless of a bankruptcy. I don't know if I would be willing to sell it back to them for at least a year of ontime payments on the option, though. Just gunshy, I guess.
Joel,
Thanks again. I appreciate your speedy response.
Janis
JANIS:
How are you? Fine I hope. Anyway your BK'd PFL owner might agree to allowing you to Negotiate with her lender on her behalf.
What this means is that for Saving both her Home and Mortgage Loan from Sheriff Sale she will grant you an option interest in her property...
Example:
Since she already filed Chap 13 BK (I'm not sure since you didn't say 7 or 13) you can get her to sign an Auth to Discuss formm and talk with the Lender (DIRECTLY) and NOT their ATTYs.
Tell the lender that you are her 'Next-Friend' and would like a Forbearance Agreement or Workout plan in return for AVOIDING the BK and DISMISS it all together???
If the Lender balks then say...she'll see you in court!
If they say YES only if the BK is dismissed FIRST then get them to put it (the workout offer) in writing b4 having your owner to dismiss the BK.
She'll have a new pymt arrgmnt + her home out of jeopardy.
You'll earn a Mutually Agreed % of interest in the home as a REWARD to you for your Efforts.
Does this make sense???
I hope it helps!
Derrick Ali
JANIS:
I Know you Know What I Wrote but I Did NOT KNOW You Didn't Know What I Meant???
???duh???
Here goes---I Wrote:
"If they(the MORTGAGE LENDER) say YES ..."but ONLY if the OWNER DISMISSES their BK FIRST!
then get them (the MORTGAGE LENDER) to put it (the workout offer for the foreclosure owner) IN WRITING B4 they dismiss their BK."
Does this help? Make Sense??
I Hope it does!
Best of the Best!
Derrick Ali
Derrick Ali,
Thank you. That is clearer for a black and white person like myself. But, tell me what is meant by dismissing the bankruptcy?
Please, one more time.
Thank you, Janis
It basically means you will tell the owner to stop bankrupcy
Derrick Ali,
Okay. If the owner is currently in financial distress, how does asking them to stop bankruptcy go over with them? Does the interested investor find out what the current owner owes in back payments, leins, etc., to decide if the deal would work financially or not, then procede to tell the owner that they will bail them out of their debts?
Janis
JANIS:
You wrote:
"Does the interested investor find out what the current owner owes in back payments, leins, etc., to decide if the deal would work financially or not, then procede to tell the owner that they will bail them out of their debts?"
That is K-Rekt!!!
Always check your #s and be sure b4 having them to risk dismissing the BK.
Also, line up your tenant-buyer prospects to provide all the cash you'll need to close the transaction + pay up the arrears etc.
I hope this helps!
Derrick Ali
I just thought I'd throw my two cents in. Guy and Gals, be very careful about giving about "legal" advise to these homeowners about "dismissing" their bankruptcies. In many cases, these people have filed for bankruptcy for other reasons besides their mortgage arrears. Rushing them to voluntarily dismiss their BK can have other implications that you may not be aware of.
I suggest that you take some time to speak to the homeowner’s bk attorney before suggesting something like a voluntary dismissal.
Additionally, there are other legal consequences for attempting to collect a debt (- communications between BK debtor and mortgage company) while the homeowner is the BK - there is this little law called the automatic stay, section 362 which imposes SERIOUS fines and civil sanctions simply for 'talking' with debtors about pre-petition debt. I've seen this law construed very, very liberally - and if a homeowner was pissed because you (investor) were pushing too hard for them to sell, they could very easily file a motion for civil sanctions against you, even though you are trying to help them.
Be careful
-Matt