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Foreclosure Forum |
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Re: Is Ch. 7 Filing A Deal Breaker?In Reply to: Re: Is Ch. 7 Filing A Deal Breaker? posted by Ward-CA- on May 26, 2001 at 8:50 AM : : Need some expert advice. I had a deal until the seller talked to his lawyer. Here's the situation: : : Seller is going to trustee sale on June 4th. FMV of 10 year old house is $350k. Total liens are the foreclosing 1st TD ($150k), 2nd TD ($20k) and IRS lien ($20k) totaling $190k. Initially agreed to sell to me at $251k. After talking to his lawyer, the seller was advised not to sell to me but to file Chapter 7 to wipe out the debt (including $10k in credit card debt) and receive up to $75k equity homestead protection. How does this homestead protection work (is there a reference I can read?)? Is this possible (i.e. can he make $75k out of this)? How does he collect this equity....from the foreclosure sale proceeds after the lienholders are paid? My understanding is that he can get whatever is leftover after the lienholders are paid without this protection. So I'm not sure of the benefit of the homestead protection. Foreclosure sales prices here in California, I believe (I've never been to a sale), are about 70-80% of FMV, which is about what I am offering to him anyway. : : The seller is taking the long weekend to mull over his options. He may still sell to me but given no additional info, if it were me, I would go with my lawyer's advice, not a buyer like me who wants to make a buck. : : I'd appreciate any thoughts or arguments on how it would be better for the seller to sell to me over any other options he may have and on how I can make this deal happen. If filing Ch. 7 is the best option rather than selling to me, I'd like to know that too. : : Thanks, : =•=•=•=•=•=•=•=•=•=•=•= : Gary, you've got to rescue this guy from his incompetent attorney!! : First, no bankruptcy action can wipe out a secured debt such as a trust deed! And there's no possible application of a homestead protection in CA as far as a nonjudicial trustee's sale is concerned either! That only applies to a Sheriff's judicial foreclosure sale in CA. : Gary, don't you see that anybody that helps this fellow wants to do it to make a buck? What do you think his wacko lawyer wants?? So don't think you're motive isn't ethical because you're really going to help this guy out. : Filing a bankruptcy, no matter what chapter, rather than selling to you, is guaranteed to ruin the seller's credit for a long time. You are offering him a sizable amount of cash and saving his credit record from having a bankruptcy against it and probably a foreclosure against it too!! : Don't wait for the weekend to be over. Email me your fax number and I will fax you the info on the applicability of the homestead exemption in CA. Then make a copy of it and go see your seller. Don't let him screw up just because he's got a bumbling attorney. Thanks for the info on Calfornia's Homestead Protection. He's seeing his bumbling lawyer again at lunch. I faxed the homestead info to him so he could read it before he meets up with the lawyer. I summarized the contents to him. Should I call and follow-up after his lawyer meeting or should I wait for him to call me? He knows my offer is still available to him. You're the best Ward. I'm sure you've forgotten more than I'll ever know. Sincerely,
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