Auction Cancelled due to Bankruptcy?

Question

I just called a trustee to find out the outcome of an auction near me, and she told me the auction was cancelled due to bankruptcy.

How would this have worked? I thought the bank would auction the house off anyway. What does an auction, where the bank is looking to recoup their money, have to do with the owner of record filing for bankruptcy?

Rich Weese · Answer

I had a home I was interested in come up and sale was stopped due to foreclosure-twice. Cahap 13 and then I guess chap 11. I really followed it and eventually bought it for $120,400. Sold it for $210K a few months later with little rehab. Turned out to be best foreclosure I've bought. If they're trying this tactic it may be a strong home to try and buy. Good luck. Rich.

Harrison Painter · Answer

Right, so keep your eye on the house very closely over the next 6 months......

~Harrison Painter

Mike C · Answer

Webb,

Now that I have read this thread, as already stated, a borrower can file BK and stop a sale until just before it goes on auction. It is a common delay tactic of homeowners who have given up on their credit and depending on the state, can prolong things a long time by filing jointly, then each individually and so on (especially PA as they are very homeowner friendly). The fact judges allow this is mystifying to me but I digress. I have seen people file and dismiss up to 7 times. But all it really does in almost all cases is delay the inevitable.

As soon as the sale is stopped/placed on hold, loss mit departments will close the file until the BK is resolved. That wonâ€™t happen until the bank/servicer files a motion for relief to release the mortgage loan from the BK, then they can start the foreclosure process again. Or alternatively, the homeowner dismisses the BK after stopping the sale and the process starts over. Until the loan is removed from the BK action, loss mit or the bank wonâ€™t deal with the borrower until BK is taken care of. There is a bit more to it but that is the basics of the situation.

Donâ€™t mess with TX as Rich suggests. They have one of the fastest foreclosure processes of any state. They donâ€™t call it Super Tuesday for nothing. One must have their sheiit together to get a deal done there.

I hope this answers your question.

Good luck

Mike C

Rich Weese · Answer

That is what happened- TX is just a wierd state when it comes to real estate etc.. Death penalty state- 21 days from nod till sold on courthouse steps. Rich.

Webb Sledge · Answer

So what I hear you saying is that bankruptcy puts a temporary halt to the foreclosure process, but is not the end/solution to the problem?

Steve Babiak · Answer

At a presentation given at my REIA last year, the speaker said bankrupts fall back into foreclosure at a rate of 80% of cases. You want the ones that get dismissed; the ones that get discharged are in that 20% who solve the problem by paying things off.

Check back on the houses you are following in several months; if they are back up for foreclosure sale, then you have some very motivated sellers.

Dismissal explained:
http://www.totalbankruptcy.com/news/articles/how-to/dismissed-vs-discharged-debt.aspx

Larry Moore · Answer

Short answer is that bankruptcy will halt a foreclosure proceeding. It is not only an end result, but also a tactic some homeowners use just for that purpose. Once the bankruptcy is discharged or dismissed, the foreclosure resumes, unless, obviously, the debt has been settled.

Auction Cancelled due to Bankruptcy?

Auction Cancelled due to Bankruptcy?

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