Dealing With a Property in Chapter 7


There are several different bankruptcy codes that people file when they get in over their heads financially. One of the more common ones is Chapter 7. This is the bankruptcy code providing the "liquidation" of the debtor's assets with the proceeds of this liquidation going to the creditors.

This particular chapter takes everything from the debtor. And even though other chapter codes afford debtors the ability to keep their homes, many choose not do this. This can be most prevalent in divorce situations where both parties have no interest in keeping the house.

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It is not uncommon to find someone in the middle of divorce proceeding willing to sign over the deed and sign all paperwork, and then you learn that they are in the process of filing a Chapter 7. This can put a type of a cloud over the title that will prevent you from cashing out until after the bankruptcy is over, or until he stops it. Another option is to have your attorney or his attorney petition the court to have the property released from the bankruptcy. And usually the court and the mortgage company are more than happy to do it if you intend to pay off the mortgage and if he's not getting any money.

It may be in the best interest of the seller to reaffirm on the property. Doing so will help preserve the integrity of the deal that you and him have. And also keep in mind that you also have the option of pulling out of the deal if things don't go as planned.

One of the main things that you will need to consider is the amount of equity in the house and the amount of equity in relation to what is owed. Unless it is a certain amount, you may come to find that it is not worth all the hassle in getting it straightened out. As long as the house is tied up in the bankruptcy proceedings, you do not want to spend any large amounts of money out of pocket. One good thing is that you don't have to make a payment on it if you don't want to. But you also do not want to put a tenant in there and collect rent and not make the payment. If you do decide to put a tenant in the house, what you should do is send in the payment. Regardless of whether they take it or not and prove that you sent the payment in.


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