Bankruptcy

When the owners are going through a bankruptcy, (in my state anyway) the house sits limbo while the bankruptcy is going on. The lending agency can not accept payments on the house and they can't push the house into any foreclosure proceedings. When the bankruptcy judge finishes the bakruptcy he may order the house for sale to pay off debts, or may order some other structure. I'm not sure if this answers your question or not, but since I haven't dealt with this as a buyer (only working for a mortgage company) I'm not sure how to exactly go about it.

Destrie

I am curious about looking at properties facing bankruptcy. How is there room for profit? If the bankrupty is filing they can't (most likely) afford their property so they would have to sell right? Then they sell the property (per say) for less than is owed on the mortgage. Wouldn't that make it a shortsale or would the fact that they file bankruptcy force the bank to take whatever they sold it for? I can see if you buy the property for way cheap you can make easy money (obviously), but does anyone know, or have done these kind of buys? Can you assign them or would you have to treat it like an REO (double closings, sell LLC, etc.?) Any information would be great. I am re-reading the books again and I am very curious about this. I know too many people up here who are in this situation to ignore the possibilities.

Richard
Bothell, WA

We live in Florida, which is a homestead state...your primary residence, if homesteaded, entitles you to a $ 25,000 property tax exemption( the county takes your assessed value & subtracts the 25K & then computes the millage rate. Another advantage is let say you live in a homesteaded house & it's assessed at 100K & your property taxes are $ 1500/yr...Now you move into your new primary res. house & it's assessed at 500K ... your property taxes will only go up a small percentage each yr because you carry that rate over to your new house, so your new tax might be only $ 2000/yr on that 500K house.
Anyway, as for the bankruptcy, you can still keep your primary res. & 1 car, despite All your other debts are wiped clear, so long as you continue to make the payments. That's why "O.J.", among others, who own multi-million dollar houses & play golf, but have "no money" to pay judgements.

The person is declaring bankruptcy and the property is part of the filing. You can't purchase the property at this time without a lot of effort to remove the house from the bankruptcy if that's possible. When all is said and done The house will go to auction and be bid on or the lender will take it back. One of the two, most of the time.
Move on to the next property, don't waste your time trying to buy a house that is part of a bankruptcy filing.
Now if the home owner is thinking about declaring or starting the bankruptcy process that is different! If they have equity and you can pick it up and still get some of the equity to the home owner at closing then you have created a win/win situation. When getting a home owner in distress to sell their house to you don't get it as "cheap" as you can, always try to help and get them some of there equity while you make a fair profit.

Just my opinions, hope this helps,
Michael Mangham
MD Home Acquisitions LLC

Thank you for the information. Of course it is always for a win/win. I just don't have the best verbage when it comes to...well anything. One of the perks of being polish. Ha-ha! Thank you again.

If I am understanding correctly....if the seller is about to file bankruptcy (motivated) we can help. Of course. If they have already filed and declared the property as part of the bankruptcy then it is a more difficult property to purchase. I was reading about our state through a few different legal websites in regards to this. They say it is possible, but patience is a key. Years could be involved and that seems to be a not-profitable way to go. Thank you again.

Richard
Bothell, WA