Bankruptcy Scams!! :(

9 Replies

Almost two years ago I owner carried a 4/2 house to a person. They paid a couple of times then stopped. I finally have to hire someone to start foreclosure. The day before the foreclosure she filled bankruptcy. I had to hire a lawyer that knows bankruptcy. So as part of the bankruptcy plan she started making payments, but not any toward the missed payments. Then she stopped making payments again. The lady's bankruptcy case was dismissed. I had to start all over again with the foreclosure. I had to pay a lawyer more money to do a foreclosure. Now today it was set to be foreclosed and my lawyer sends me an email saying the lady filed bankruptcy. I said, " What"?  she already filed bankruptcy and it was dismissed." He wrote back that she could file bankruptcy as many times as she wants.

Folks,

This house has a underlining note on it and I am providing free living for this lady. I have a wife and 4 children. This lady is living in a bigger house than I am. I am paying more for her fee living than I am paying for where I live.

Is it so that she can keep living there and filling bankruptcy after bankruptcy? 

if I was in that situation. I would try to talk to her like she's a civilized person (bite my tongue) and see what will it take to get her out. Maybe she needs $1000, $2,500, 5k, 35k, cash for keys, someone to hear her story (what she's going thru), a hug, or needs to hear how it's hurting your 4 kids and Family.
The point is your tried one way, maybe try another way.
You can catch more flies with honey than you do with vinegar, they say. Good luck and keep us posted

There is a minimum time limit between BK filings, don't know what it is in TX. Getting the second one dismissed, or a relief from the automatic stay shouldn't be that difficult.

Eric, 

We already tried the honey thing before we filed the foreclosure the first time. Cash for keys sounds good in theory,but it is harder in real life. Why would someone take money to move when they are being housed for free? I have heard many people talk about cash for keys, but I haven't meet to many investors that have sussessfully used it.

Any other investors in Texas  faced this kind of dilema?

Hire a new lawyer.

The automatic stay is limited in the case of multiple bankruptcy filings just for this reason.

It won't be fun or cheap but it is not unlimited and it can result in fraud claims against the debtor if the are not actually trying. There are fancier terms but you will have to get an attorney to navigate this. Find one who practices a significant amount in bankruptcy law. Most of the good ones are specialists. You need to be all over the time limits and the attorney needs to understand the debtor is playing the game.

405-426-9677

I believe in Texas you can only file Bankruptcy 3 times before they cut you off but I am not a lawyer just from experience.  Like the previous post, hire the lawyer and go through the process again.  This is the worst thing that can happen in a seller financed transaction and probably the biggest sub-2 risk you can face.  Unfortunately there is not much you can do.  That's part of the reason you collect a big down payment and hopefully save some of it just for this house in case this happens.  

@Joel S. Bankruptcy law is a federal law and very similar in all states.  As a general rule, a person can file bankruptcy 3 times in a year.  A creditor can ask for "in rem" relief if they get stuck in a cycle like you describe above.  In rem means against the property.  If the judge grants you in rem relief then it won't matter if she continues filing bankruptcy as the property will no longer be subject to bankruptcy protection.  You should find a good bankruptcy attorney with experience representing secured creditors in bankruptcy.  

You can check out this website for a little more information -- https://www.theallenlawfirm.com/bankruptcy/

**Please note that I am an attorney but I am not your attorney.  This post is intended to be used for general education purposes.  You should seek the advice of licensed attorney in the proper jurisdiction before acting on the advice of anyone or any advice in a forum!

Good luck!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.