Contacting Home owners in Bankruptcy

2 Replies

I'm going to go contact homeowners who have a Notice of Sale, but I noticed that some of them have their Notice of Sale postponed due to "Bankruptcy".  By the way, I use property radar to look for this data.  It doesn't say whether they have Ch 7 or Ch13.  I was wondering if it's still worth it to contact these homeowners or am I wasting my time?  

Originally posted by @Gi'angelo Bautista :

I'm going to go contact homeowners who have a Notice of Sale, but I noticed that some of them have their Notice of Sale postponed due to "Bankruptcy".  By the way, I use property radar to look for this data.  It doesn't say whether they have Ch 7 or Ch13.  I was wondering if it's still worth it to contact these homeowners or am I wasting my time?  

 Any property that is in a chapt 7, chapt 13, or chapt 11 is part of the bankruptcy estate and requires court approval with a signed order to sell. It is up to the Trustee to determine if your offer price is sufficient, that requires an appraisal, and the Trustee has to assure the court that they have not given you preferential treatment. Any creditor in the bankruptcy case can object and would probably win, squelching the deal. That scenario doesn't happen often, but can. The process takes 60 to 90 days at the minimum if the Trustee and owner are co-operative and no one objects. The seller has to agree to the sale and proceeds will go the estate to settle debts. The owner has incentives to not co-operate with you in selling to you in the bankruptcy estate. Too much into the weeds here, but you can look it up in United States Code Title 11 & sections of Titles 18, 26, 28, and 50 of the U.S.C. if that floats your boat.

Depending where they are in the process, it probably is a total waste of time unless you can sort through lots of cases and you know what to look for and have a bankruptcy attorney experienced in purchasing properties from bankruptcy estates. Pretty tricky. Probably not worth the energy you'd have to put in to it.

Equally so with chasing foreclosures. Under the new laws, unless you are an attorney, real estate agent or lender, you can get in deep trouble contacting people with Notice of Default or Foreclosure status. Check with your local attorney to determine what is legal in your state. 

For instance, in the Soviet State of Washington, it is a criminal act, Yes, criminal act to contact people who are in foreclosure, who are in default or who THINK they may BECOME in default.  Now, how am I supposed to know if someone THINKS they may get behind sometime in the future? What if they lie to me and tell me they are current but they don't tell me they lost their job. Too, bad. I lose. The financial penalty is 3 times the value of the property.

And to think people still want to move to Seattle. Ha, Ha, Ha, Ha, Ha, Ha

@Gi'angelo Bautista you've stumbled upon an interesting use case that has been successfully used to buy properties. The key is to subscribe to Pacer and watch each of those properties for a Motion for Relief from Stay - once that has been granted, the foreclosure may proceed, and usually does pretty quickly. This may be the most motivated you ever find a owner, as they usually know they are out of options.

That said, Account Closed is absolutely right that it's still complicated. On the bankruptcy side, keep in mind that many people facing foreclosure file bankruptcy under the mistaken belief that it will stop the foreclosure, and in many of those cases the foreclosure is the only reason they have filed. In those instances, the owner can avoid all the bankruptcy related issues Mike mentions by withdrawing the bankruptcy, and you may find that solves that issue. That won't, however, solve the other issue you face, which is the equity protection laws that Mike also mentioned. In CA you'll want to look at CA Civil Code 1695. It does outline what is required, and even if you follow it to the "T" there are still risks. Not impossible, but I would definitely recommend discussing your plans with an attorney so you fully understand those risks.