Impact of Chap 7 Bankruptcy on timing of Auction


#1

I am following one property that had a notice of trustee sale issued with a initial auction date set for late February.? The auction was delayed at the request of the beneficiary until mid-March.? I just followed up again at the county recorders office and there is a document recorded that shows one debtor/current owner?has filed Chapter 7 Bankruptcy.?
Is there any way to tell if the lender has filed a motion for relief from the automatic stay?
Is there any way to estimate how much longer the delay will be until this property actually goes to auction?
Thanks again - I continue to learn a great deal.


#2

Hi Jim - you can follow the bankruptcy and see whether or not a motion for relief from stay has been filed or granted using PACER. You can find out more about PACER here:? http://pacer.psc.uscourts.gov/.
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Depending on the type of bankruptcy and how quickly the mortgage co files their motion I’ve found typical delays to be 3 to 5 months.


#3

I have been tracking a house that has been delayed due to BK. I looked up the BK case on Pacer. As it turns out the people own two houses. On their filing of intent, they indicate that they will surrender both properties and marked the box that they are not expempt. The lender for the house I am not interested in filed a motion for relief from the stay and it was granted. Nothing has been filed for the house I am interested in. They filed Chapter 7 and it appears that there are very few others assets or debts than those related to the real estate. Is it necessary for the lender to get the relief from the stay? Or will the foreclosure continue once the BK case is closed? Is there a minimum time for the BK case to remain open? I guess I am wondering how the process comes to an end and if the relief from the stay is required no matter what.


#4

Motion for relief from stay is most common, but if they surrender the property I doubt it is necessary. That said I’m pretty sure the lender can not proceed with the automatic stay in place until a motion for relief is granted, or the judge otherwise releases the property for sale. For now I’d just keep watching the filings.


#5

For one property that had gone into bankruptcy, motion for relief has been granted. In your experience, are there any other events that can further postpone the auction? Also, pacer report shows that current owner owes the property taxes. If home is auctioned before the bankruptcy case is closed, is the new owner still responsible for them? Thanks! Sam


#6

They could potentially dismiss the bankruptcy and refile. They also might work something out with their lender - though lenders tend not to be too understanding after a BK. Good chance it will go to sale. The new owner would be responsible for property taxes regardless of the bk.


#7

Hi Sean, Thanks for your reply. From pacer docs, it now seems that court has issued order on non-contested motion for relief from automatic stay as owner had filed intent of abandonment of property. Given this, I have following questions: 1. Can there still be potential delays in sale or is there a good chance that house will go to auction? 2. Are there any additional pitfalls to look for buying a home whose owner is going thru bankruptcy? What else should I look for in the pacer history? Title and lien history from county record are clean. 3. The forclosing lender is Wells Fargo and the home is in a very desirable area. Given that WF has a strong presence in CA and the home is really good condition (seen pictures via previous short sale attempt), bank may decide to sell home on their own or keep the opening bid close the market value. I was thinking to bid as high as 5% below the market value. Am I taking huge risk given there may still be some unknown costs? House has been vacant for the past 3 months atleast, but seems in good condition from outside. I will appreciate any other insight you can provide. Thanks!! Sam


#8

In the past, it would likely sell on the next scheduled sale day. These days with banks postponing vacant homes for no apparent reason you never know. I’ll typically review the BK filings. I see it as an advantage personally as they are likely to declare all outstanding debt which makes it less likely I’ll miss something in my title search. Only downside, is that I have had issues with folks who use BK as a delay tactic. I had a couple of issues where folks dropped the BK they used to delay the foreclosure, and then refiled to delay the eviction. Only a delay and some extra eviction costs, but still a pain. Keep in mind the risks, especially no title insurance and no inspections. Unless you really want the house for yourself and are prepared to overpay should unexpected expenses come up, I personally wouldn’t recommend bidding to within 5% of market value.