All Forum Posts by: Paul Choate

I already sent this to Bob privately but I just wanted to let everyone know for your edification-

This case was originally filed as a chapter 13 (probably to save the home in question). It was converted to a chapter 7. The mortgage company filed a motion to lift and abandon in the 7. That takes the property out of the bankruptcy and allows the mortgage holder to proceed IN REM (against the property only). The case was reopened when the trustee found a tax refund to administer. It does not reopen or change the issues for the mortgage company- it is all about the non-exempt assets. All of this explains the length of the case.

The terms TFR and NRD are just acronyms. TFR- is trustee's final report and NRD is something related to a notice requirement. They are not important on their own. 

@Rick H. the stay applies to the collection of the original debt against the debtor personally and never expires absent the debt falling into a nondischargeable category (taxes, child support fraud etc.). 109g are limits for repeat filers so they cant use bankruptcy to play games with mortgage holders. As with most laws, there are always exceptions!

I should clarify, generally a motion to lift stay is filed in conjunction with a motion to abandon and the purpose is to proceed under state law for the enforcement of the lien which still exists after a discharge. It does not generally lift the stay against the debtor since that is the point of filing bankruptcy. That is why you should never talk to a debtor without legal advice and even then you should check with their attorney if they have one. 

The following is a general discussion of the operations of bankruptcy. Please seek legal counsel for your specific situation. I am not providing any individual legal advice.

When a case is filed, an estate is created. This estate consists of all of the property of the debtor. Property leaves this estate in three ways: 1. The debtor claims it as exempt and it is automatically removed 60 days after the first meeting of creditors (341 hearing) if no one objects. It is still subject to any voluntary liens (i.e. mortgages). 2. Creditors can file a motion to abandon and lift the stay. If no one objects or upon a ruling by the Court, it is abandoned from the bankruptcy estate. 3. The trustee can abandon the property or liquidate the property (abandonment- usually done in a report filed before the discharge of the case; liquidation- private or public sale). Each of these has rules and exceptions. An undisclosed property is never abandoned.

The fact that the case has been open for over 5 years is a big red flag. Something is going on. The trustee may be looking at the equity issue. @Mike Hartzog this would only apply to non-exempt property (not their home- Oklahoma provides an unlimited homestead exemption if the property meets certain rules). 

The other option is there may be an issue with the perfection of the lien on the asset. This mortgage predates the mortgage crisis and the changes in the rules so there could potentially be issues in that area. I am not saying that is the case, just that trustees can do things no one else can. If a case is open this long, something is up.

@Bob Malecki if you would like to give me the case number and district (or county), I can let you know what I see. If you just have a name you should probably send it pm.

Don't contact the debtor directly. Contact their old attorney first for permission if you are willing to work with them. 

I'm an ok bankruptcy attorney. I assume you want to move forward with a foreclosure. This sounds like a very unusual situation which probably involves assets or a contested matter. To be safe you may need to file a motion for relief from the stay as the trustee may be claiming an interest in the subject property. You might contact the trustee to see if they have any issues or if they have abandoned this asset. Most of them are very helpful when they can be. I only represent debtors but I can refer you to some creditor attorneys if you need one. 

understand! I will be there for everyone else.

@Heather M. 

Don't be scared by this post. Read everything @David H. wrote. He nailed it perfectly. All of my properties would be considered D or C by many here. They are cash cows. I work my tail off and took it one house at a time but I have built up to 14 houses in 8 years and have invested about $60,000 of my own money. The rest of the gain was paid by my tenants. There will be days you want to quit. You will make huge mistakes. It takes sacrifice. It is work. Blah blah blah... I think you get the idea.

There are many of us out here who have done it and are doing it. I would never have been able to start with Class A properties. If I had, one mistake could have bankrupted me. My last house was bought at an estate auction for $3500 and I put $5000 into it. (all new interior, windows, doors, updated plumbing and electrical.) It is rented for $400 per month. I can screw up a lot and still come out ahead. Plus I am local. I know these houses and these people. The underlying message is you have to have time, money or both. There is no short cut. I make great returns but do more work than someone with a better house. That is a trade-off I am willing to make for now. I tell my son- when I hit 100 houses, I am turning it over to him and my wife and I will be on the beach. It will be his job to get us to 1000. He's 11 now. I am right on track.

Hello all! I am very sorry for falling off the map the past two months. Also sorry for the short notice.

We will be having a meet up on 1/27/15 @ 12 noon at Casa De Los Milagros Mexican Restaurant and Cantina, 5111 N. Classen Blvd. This is the same location as the October Meeting. We had another good turn out at the October meeting so please come to share your stories and network with local investors. There is no cost for coming- lunch is on your own if you want it. 

Oklahoma City, Norman, Moore, Edmond, Midwest City, Yukon, Mustang

@Brian Marshall 

Please let anyone in your networks know about it.

I just remodeled a unit in Shawnee, ok. It required a new breaker box moved out of a new bath space outside on an exterior wall. I also had the electrician tighten up a few other issues. Material and labor was about $800.  When in doubt I always just do the electrical. Mine are holds but I have found the cost to be very reasonable and it is not fun replacing things after tenants move in. I assume an inspection will notify buyers that the wiring is still old. I have found it is a big selling point to say the electrical is updated. Tenants see it as a safety issue. 

@Crysta Balbontin about wholesaling in small towns (I am a buy and hold guy, but always looking for more):

I am from a town of 10,000. The reality for a wholesaler is you only have a limited amount of opportunities at any given time. So, you need to think in longer time horizons. Also, you don't need the tactics of "regular" wholesalers because you are not just trying to hit the largest numbers of people. I can drive my entire town in a day. 

Example: I had been watching a house for two years and had mailed the owner a couple of letters. I noticed one day that the door was open so I sent another letter. The next week it was boarded up and had a no trespassing sign with a number on it. I called and it led to an out of state owner selling me 5 houses because they were tired of dealing with the city.

You are not going to get many of these in such a small area. I have had to add two surrounding towns as I have grown to find more deals. But, if you make it a part of your life to drive a new street every day, send out 50 -100 letters per month, hand out business cards and tell everyone you are a real estate investor- you can build your reputation and grow.

The best thing is you can be the only game it town. With that comes the reality that there is not much game to go around so you have to have other business/jobs to support you while you are growing or expand your area. Good luck!