My seller has a first and a second lien, the second lien is part of her bankruptcy proceedings. Will the first need to give concession to the second lien?? I have been told no, also need bankruptcy court to approve the selling of the home in a ss, how do I get approval from the second lien? I have had no contact with the second lien due to the bankruptcy, has anyone here had this same situation come up???
You are correct, Walt. An attorney is a better source of information and you can usually get a free 30-minute consult.
And the seller's Atty knows the details of HER case, not just generalities.I wouldn't expect any charge to get the questions answered.
Definitely get permission from your client to speak to her BK attorney and see if it is a 7 or 13. If it's a 7 you will need to wait until the client gets a Discharge (about 60 days after the Meeting of Creditors). There is an Automatic Stay of Creditors in effect until a Discharge is received. The creditors are prohibited from contacting the debtor during that time. If the case is not closed, the client will need to get BK attorney to have BK trustee abandon the asset. Foreclosure sales typically get postponed and the foreclosure notice and publication will be started again after the BK debt is discharged. If the 2nd has filed a lien, a BK does not remove it, only the debtor's responsibility to pay is removed, unless the property is sold by the debtor. The 2nd can still ask for money to release the lien in a short sale, even though the debt does not have to be repaid by the BK debtor. These are general guidelines for short sales and Ch 7 BKs. The BK attorney can guide you through the communications timing, but they probably won't be excited about it unless they are paid for their time on top of the original BK cost. The beauty of a post BK short sale for a debtor is they have no liability, but they have a valuable part to play - signing a deed - which gives a clear title. It also resets the debtors credit repair clock and releases them from liability of preserving the lender's asset, which remains until the title is transferred out of their name, either by a short sale or foreclosure (in some states called a Public Trustee Sale, not to be confused with a BK Trustee sale). The tough side is I have never seen a debtor receive short sale HAFA or Homeowner incentive money after receiving a BK Discharge. I do know some homeowners who have successfully discharged their mortgage debt and received cash for keys to move out after their BK has been discharged.
I have seen chapter 7 that ran almost 5 years from creditor conference. The judge finally closed the case by demand from the debtor with a motion for sanctions against the BK Trustee (sanctions against God??). The BK trustee was the problem, he was trying all kinds of things that were from dumb to illegal to obtain ghost "assets" (untouchable assets not owned or held by the BK estate nor the BK party at any time prior to or after the BK). One never knows.
My point is only that one should not assume just to wait for any court actions.....one can help make them happen under good circumstances.
The suggestion offered was for the agent to seek legal counsel to determine options and timing. Chapter 7 BK is a liquidation bankruptcy and typically closes much more quickly than a Chapter 13 BK which is a payment plan spread out over a period of 5 years. Bankruptcy is an action that occurs in federal court and has very specific rules. An attorney whose specialty is bankruptcy can give the best direction in matters regarding bankruptcy's effect on a real property asset.