Chapter 7 Bankruptcy

[Carlos Garza]

Hello, needing some advice. Wanted to see if anyone has gone through same situation. I owner financed a property 2 years ago. Balloon payment is due in March 2026. I used a title company for the contract. I just received notice that tenant has filled for chapter 7 bankruptcy. He is up to date on payments and recently paid for 3 months. Went to initial hearing and his bankruptcy was approved. What are my options? He did say he wanted to talk about restructuring the contract but I have no interest in doing that. I am assuming that as long as he makes the monthly payments we are ok. Also assuming he will not be able to make the final balloon payments. Does he get foreclosed on? How much protection does he get with the filling? I am in Texas and property is located in Chambers county. Thanks ahead for replies. 

[Chris Seveney]

Quote from @Carlos Garza:

Hello, needing some advice. Wanted to see if anyone has gone through same situation. I owner financed a property 2 years ago. Balloon payment is due in March 2026. I used a title company for the contract. I just received notice that tenant has filled for chapter 7 bankruptcy. He is up to date on payments and recently paid for 3 months. Went to initial hearing and his bankruptcy was approved. What are my options? He did say he wanted to talk about restructuring the contract but I have no interest in doing that. I am assuming that as long as he makes the monthly payments we are ok. Also assuming he will not be able to make the final balloon payments. Does he get foreclosed on? How much protection does he get with the filling? I am in Texas and property is located in Chambers county. Thanks ahead for replies. 

 If he filed Ch 7 he is no longer responsible for the debt, so you CANNOT make any collection calls or notices. He owes you nothing. This is why you have a mortgage or deed of trust. He does not get a free home, you have the right to the property which is your remedy - I would foreclose on him now. 

The other option is they can do a reaffirmation agreement which adds the debt back to his name but you are not obligated to do so. 

Get an attorney involved ASAP.  Not legal advice!