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tbirch05, Home Seller in Ohio

Can I sell a rental property prior to filing a chapter 7 bankruptcy.?

Asked by tbirch05, Ohio Thu Feb 28, 2013

I am unemployed and have been for several months, when times were good I purchased a rental property from some friends (on a personal loan) and pay them monthly, I still owe them money. I am told (by a local attorney) that the friends will no be able to collect the money if I file the chapter 7 and that I can not sell it to pay them off before filing. The value of the property is twice what I currently owe, Unfortunately if I could sell at the current value it would not cover my exixting debt so a bankruptcy will still take place. Is there anything I can do so to see that my friends are repaid during this process.

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3
James Gordon ABR PBD SFR SRS’s answer
Your attorney who knows the law has already told you that you can not.

"I am told (by a local attorney) that the friends will no be able to collect the money if I file the chapter 7 and that I can not sell it to pay them off before filing."

Why are you coming to Realtors® to ask the question when you have legal advice and we are not attorneys?
0 votes Thank Flag Link Thu Feb 28, 2013
I was just asking a question (on a couple different sites) to verify what I have been told and to see if I do have the right attorney. If my question upset you - you did not have to answer! I was looking for some constructive feedback. I did ask the same question on an attorney site if it makes you feel better. Sometimes professional people (attorneys and realtors) do not have all the answers and it doesn't hurt to verify what they have said, there may be other options that could be considered. My thought a realtor may have come across this scenario before and could provide another option that I could have ask or shared with my attorney. Certainly you can understand that! Have a nice day!
Flag Thu Feb 28, 2013
Really need your attorney to clarify what will happen to the property through BK. Good luck!
0 votes Thank Flag Link Thu Feb 28, 2013
This is a question best addressed by your bankruptcy attorney. In my opinion the courts are very sensitive to creditors being given preferential treatment. The court could require your friends (creditors) to disgorge any moneys you provided to them prior to filing for Ch. 7. Your attorney will be able to give you the finer points of this.
0 votes Thank Flag Link Thu Feb 28, 2013
Thanks for your reply. When I spoke with the attorney he said the same thing, When I meet with the attorney with all my financials we were to discuss my rentals in more detail, I just wanted to see if there were any other options before the meeting. (since you and my attorney are saying the same thing, i guess there are no other options) I just thought since the loan was specifically to purchase the property, it doesn't seem right that they do not get repaid (in full) first when the property is liquidated, before the money goes to other creditors. Thanks again!
Flag Thu Feb 28, 2013
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