thats ok, i appreciate it
leanne

Mon Apr 14 2008, 10:41

Hi Leanne. The reality is that the filing of a BK will at least temporarily affect the foreclosure proceedings and what happens after the BK filing depends on the particular circumstances of the case and you can't rely on generalities of BK to find an answer. It's good to have a basic understanding of the BK process, but you can't use it to make predictions about the outcome of a particular case. My earlier answer was only intended as a broad overview of some of the issues involved in BK cases, not as legal advice in any way or shape. I think what's important for real estate agents to know is that BK will affect an owner's ability to sell the house and trying to figure out how long and what will happen if an NOD is filed after the BK filing or was already in place prior to the filing is really not a real estate agent's job and most likely you'd get it wrong anyway because you don't know all the facts (no offense intended). I personally would counsel my buyers not to make offers on properties that may end up in BK soon. Sorry I can't be of more help to you.

Sun Apr 13 2008, 07:55

thank you Ute, ok have to ask a few more questions though. So, if an nod is already filed on property and then the people try for BK, what happens? Next one, ok you are in BK proceedings and you aren't making payments on the house during the proceedings.. what happens?
Thanks for the clairfication.
agent - leanne smith

Sat Apr 12 2008, 14:11

Hi Leanne. There's a difference between what happens when someone files for BK and whether the obligation under the deed of trust can be discharged. Since you are in CA where most loans are secured by a deed of trust and the only recourse that a lender has is the trustee sale for purchase money loans, the BK will not affect the lender's ability to pursue their rights against the property, but the property initially becomes part of the BK estate as it is part of the debtor's assets. If the BK trustee/court decides that there's not enough equity in the home, they'll release it from the BK estate and the debtor can sell it, but he still has to pay off the lender or short sell. As long as the home is still in the BK estate, the owner can't sell it because the owner does not have authority over the BK estate properties. When you deal with BK issues, you have to distinguish between what the debtor can do and what creditors can do in terms of pursuing claims against the debtor. You probably have heard of the automatic stay in BK cases. The automatic stay only prevents creditors from going after the debtor unless they apply for relief from the automatic stay, but the automatic stay does not prevent the debtor from pursuing claims against others. When a bank starts foreclosure proceedings under the power of sale in the deed of trust, they are really not going after the debtor to collect a personal debt. They are enforcing their rights against the property that's now part of the BK estate. On the other hand, if a debtor files for BK after having signed an unsecured promissory note as part of a short sale approval, the lender's efforts to collect on that personal note would be stayed upon filing of the BK. I hope this answers your question.

Sat Apr 12 2008, 10:26