Short Sale finalized Bankruptcy afterward from seller

[Kevin Polite]

We closed on a short sale (after nearly 5 months) and have the HUD and were getting ready for demo when we received a call from the seller's agent. She said that an attorney for the seller filed bankruptcy 2 days before our closing, however, she was suppose to wait until after the closing so the home wouldn't be listed as an asset. She did not include the home as an asset. The bank sent the money back to the closing attorney. I've got a call into the the bankruptcy attorney, however the seller's agent said we should be ok after the May 16 court date. We had just started demo. Has anyone ever heard of this before? I've researched on Bigger Pockets and haven't found a similar scenario, but am wonder should I contine with work or hire an attorney?

[Wayne Brooks]

The bankruptcy trustee won't have any interest in the underwater house. But, you could have further delays, it may depend if it was a 13 or a 7. I would wait. The bank will likely have to issue a new approval, and you'll have to close again.