I'm in a Chapter 13 myself. Is it possible to still wholesale properties? I have an LLC so that's good. But, the property is never in my name; just the contract. And then I essentially have a cash buyer buy my contract for a higher price (makes my assignment fee).
So... wholesaling seems like it's still viable right?
Secondary question: I am NOT able to do a double closing with a Short Sale property am I? Because technically, the house would indeed be in my name or my LLC name and I would need a POF letter too... does this seem accurate? Or is this viable too?
Are you doing this to hide income from your bankruptcy? I doubt a single member LLC would accomplish this.
You can buy a short sale in an LLC name.
Current BK and wholesaling and/or double closing don’t mesh.
Updated about 2 months ago
No title company is going to close deals for a debtor in BK without dealing with the BK Trustee. Increases in income are supposed to be reported to the Trustee, who may determine that payments to creditors must be increased... or that the debtor no longer qualifies. Also, generally speaking, all after-acquired property (even equitable interests) belongs to the estate, not the debtor.
Yes, you can wholesale while you are in a Ch 13 and you wouldn't be hiding your income because 1) you still have bills to pay and you are allowed to earn money while in bankruptcy, and 2) you are required to provide the courts with a copy of your income tax return each year.
Doing a dual close is a different story though because if you do it in your own name, you would likely need the court's permission (ask your bankruptcy attorney to be certain). It might be possible since you wouldn't be buying and selling your personal residence or getting a loan and it's the way you are earning income.
Regarding executing the transaction via your LLC, it likely depends on if your LLC is a pass-through or recognized as an S-corp. If it's a pass-through then the above statement would still be applicable. If it's an S-corp, you would be best served to ask the title company about the LLC since they have real estate attorneys available who are well versed in this area.
I would advise both your attorney & title company that you are being proactive before you have a contract because you want to ensure you are following proper procedures
@Jeff Lee During a bankruptcy, all assets are under the control of the court appointed Trustee. You would need court approval for the contract to purchase property, sell property, and any other agreements.
Ok thank you everyone. Correct, definitely not hiding anything from a trustee. It's just I thought wholesaling a Short Salen(not a normal house) requires a Double Closing. And I don't think a double closing is possible, even with an LLC, without Court Approval
Free eBook from BiggerPockets!
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.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you