What do you do when your seller files for BK?

[Jasmine Willois]

Just wondering if anyone out there knows what to do when your seller goes out of business, specifically files for BK and you need additional transfer docs or re-executed assignments? This has happened to a pretty established note investor I know and has jeopardized his entire existence and success record. One of our members had the same issue but we resolved it fairly quickly. Looking to see if this has happened to anyone else and if they found any workarounds. 

[Don Konipol]

@Jasmine Willois

A claim needs to be filed within 90 days with the bankruptcy court. Usually, the debtor will list the debt on their listing of liabilities. A bankruptcy provides an automatic stay on any foreclosure process. The lender can petition the court to lift the stay, but if any equity exists in the property above the indebtness the court will deny the relief of lift and the lender will be dealt with in the course of the bankruptcy. The lender will have the right to plead objections to any part of the bankruptcy plan. As you can see an attorney, licensed to practice law in FEDERAL court will need to be engaged.