Client needs a $10K loan to make $50K on his house-in bankruptcy

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I need to call on the wisdom of the BP Hive.

I'm representing a client on the sale of his home in Brockton MA.  It's a bankruptcy sale which complicates things a little.

It's a VERY difficult home to sell because it had been converted from a duplex to a single family home that's now 6 beds, 3 full baths and almost 3,300 square feet.  The percentage of buyers looking for homes that large is minuscule.

The seller is thinking of converting it back into a duplex and he thinks it's a $10,000 job.  That conversion will add at least $50,000 to the resale value, plus it will sell very quickly as MFRs are in very high demand (average for similar homes 32 DOM).  

Of course, the seller, who is in Chapter 13 bankruptcy, doesn't have $10,000.  Sounds like a case for a small private loan, right?  Here's where the BK complicates things.  The BK court won't let him use the house for collateral, nor does he have any other assets to pledge as security.

He's willing to be generous with a fee.  $10,000 loan, $10,000 in interest.  Double your money in 120 days (probably much less) - but with no collateral and the borrower already in Chapter 13 bankruptcy, I'm not sure where to turn.  I need ideas.

OK, BP - do your stuff!

Hi @Charlie MacPherson , I don't have a specific private money strategy for you, though I would counsel that once you have a decent proposal/informal deal idea worked out, the next most critical piece will be getting a sit down conversation with yourself, your client, and your client's bankruptcy attorney. It is possible to take on new debt for limited purposes in bankruptcy, though there are more exceptions and potential snags to get into here that will be where your client's attorney comes in. He/she will be able to address how something would need to be structured and presented to the court. 

@Josh Ryden Great idea - in fact, his BK attorney just called me for an update and I ran this by her.  

She echoed your statement, saying that there are limited reasons allowed for additional debt, but this should qualify.

Here's hoping that the BK judge sees things our way.