Is Seller Better Without Bankruptcy Protection?

[Ibrahim Hughes]

I'm about to meet up with a seller who is on her way to being dismissed from BK (chap. 13) due to her inability to make the payments. She thought the payments would be cheaper when she filed but of course she was taken in by those who make money on her filing.

In any event, her letter from the Trustee says that if she doesn't pay x amount of dollars by 7/21/10 she will be dismissed. She doesn't have the money anyhow (and actually has some equity in her primary home) to make the payments. My thinking is that at this point she is better being dismissed from BK so that any deal she and I make won't have to be approved by the Trustee. Am I correct in my thinking here (generally speaking)?

[Ibrahim Hughes]

I posted this on another site where a person I know who is extremely knowledge about real estate legal matters, especially BK, had this to say:

Yes, you must wait to sign the contract because any contract dated while her assets are part of the Bk estate, (prior to closing of the Ch 13 case), would not be enforcable, even after the case would be closed. She can't agree to sell what is not hers, and technically the Trustee now owns her assets.

It was followed by another knowledgable investor in this area who stated the following:

You can have your seller complete and file the BK form "Petition for Order for Voluntary Dismissal" along with getting an Order for same signed by the BK judge.

Or, if you're impatient or have control issues, it may be even odds as to whether the Trustee's Request for Dismissal or Petition for Voluntary Dismissal gets signed first, but it's good to know that you have tools that you can use and a basic understanding of the BK system/documents.