Few questions about NPN going into BK

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If anyone is familiar with the bankruptcy scenario, a few questions:

1. Is it true that Chapter 13 (reorganization of debts) is more common than Chaper 7 (extinguishment of debts) nowadays?

I see Ch. 13 = a payment plan will be attempted. If that fails, then foreclosure follows. For Ch. 7 I see foreclosure as the exit.

2. BK proceedings slow down the payment plan or the sale, lowering expected return due to the cost of holding and maybe additional repairs. Do you guys price a BK filing as your most conservative estimate, on NPN deals that have fair amounts of equity (and thus an incentive for borrower to try to keep the home)? Seems like that would be the scenario to try to price the purchase around.

I think a Ch. 13 filing may actually be worse by allowing two points for default before a foreclosure sale, but please correct me if that is wrong.

Thanks for any info!

@Brian Kempler I'm not aware of any statistics regarding whether there are more 13s or 7s but, in my experience, all of my NPNs that go BK are 13s. Ch 13 I believe is the most common for people who want to keep their house.

We like to buy underwater NPNs because we think there's less BK risk than loans with a lot of equity, which he avoid buying for the most part. Exceptions are when the coupon is high, which means that the payoff is increasing the longer we hold it.

Pricing NPNs is tricky and if you're too conservative, you won't buy very many loans. Sorry for the cryptic answer but there's so much that goes into pricing considerations.

Here's an article that goes into a lot more detail about Ch 13 considerations for a creditor, which might be helpful to you.