Seller is placing home under bankruptcy and getting out of it free & clear

There are a couple of ways to deal with this situation.
You will always be dealing with the bankruptcy court.

If the seller has little equity, you can ask for a short sale. You will have to deal with the bank and the bankruptcy court to allow this to happen.

If there is a lot of equity, you will still have to deal with the BK court, because all of the equity the seller would receive, would go to the court to pay off other debts. The court may not allow a low sales price.

If you can't work out something with the bank/court, the house will be foreclosed on. You will then have to wait for it to come back on the market as an REO.

The above are the only ways I know of to complete a deal in bankruptcy, there may be more, but that is all I know.

Always remember, just because it may be a deal, it may not be worth pursuing. We're in this to make money, not spin our wheels. This deal could be a good one. You could spend a whole lot of time on it though. Make sure the profits are worth the effort. Having said that, it could be a great learning experience that could benefit you in the future.

A little tidbit. If a loan is guaranteed by FHA or VA, sometimes banks won't do a short sale. If they foreclose, they will get the full loan amount from FHA/VA. So, there is little incentive to do the short sale.

Good luck,
Jim

I will keep an eye on it. The owner said he's putting it under Chapter 7 to be more specific. Tried to work a deal out with him but he has two mortgages and $30,000 in credit card debt. He put the house on the market and right away had a buyer but the credit card lein was a deal breaker. Thanks for the info I appreciate it!