Owner filed Chapter 11, and the house is about to be auctioned

6 Replies

Has anyone ever been in a situation where you liked a house that you saw on a foreclosure website, eagerly wants to get it, and during the title and lien search process, you saw the owner filed for Chapter 11. The court document states there is a suggestion of bankruptcy and relief was ordered on 4/2/14. The auction date starts 5/01/15.  I am ok with paying off the second mortgage and all liens.  I know some will say walk away from this scenario, but I really like the home, is there any advice out there ? Why would the bank still plan to sell the home or do they not know about the bankruptcy ? If I buy the home, what can I do to get the homeowner out of the house. I believe the bank will assign their rights only, but they wouldn't guarantee a vacant home, or provide any other reliefs for me, in the contract that i would sign.

Releif of stay gives the bank the right to continue the foreclosure process.

"The auction date starts 05/01/15". So this is a REO, going on an auction site like auction.com, home search, etc.? if so, this means the bank has title, because they already foreclosed. The bankruptcy and other junior liens that existed (and are now gone) are irrelevant. It's a straight up sale. If this is the actual foreclosure you're talking about (online on the County site) it's just like any other foreclosure auction...the BK stay was lifted to allow the auction. And, individuals file Chapter 13, busineeses file chapte11.

@Wayne Brooks

  looks like Relief was granted 4/2  and new auction date 5/1  from what this OP is saying.

owner could roll into a 7 and buy more time... the 11 and 13 is a tad confusing as you state.

@Jay Hinrichs Relief from the stay was in 2014, 12 months ago. So I assume the foreclosure has been completed by now. Plus OP said auction "starts 05/01/16" which sounds like a 3-7 auction window, on a REO. Our "court house steps" foreclosure auctions, online, last about 3 minutes. So, I assume she's looking at a REO auction.

@Wayne Brooks

  I guess it would help if I actually read the dates correctly .. I thought the relief just happened and foreclosure was coming up in a few weeks..  LOL...

I am not familiar with the bankruptcy protections, but wouldn't the homeowner first try to shield the home away from the creditor until they reorganize, or does the bank's loan agreement with the borrower include a clause to prohibit the borrower from included the home in the bankruptcy filing?

I would assume if the bank's loan agreement includes a clause that prevents the mortgagee from including the house in the BK filing, then all would be good in terms of me getting possession of the house, after winning at auction.

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