@Bill Gulley is correct in that the IRS will release the lien, sometimes requiring some partial payment; the balance of any debt or judgment stays with the person who owed the IRS.

It is the obligation of the debtor to start paying the post-petition payments directly to the lender.

In my old home state, those who have legitimate hardships often have to file a chapter 7 bankruptcy, make a list of all their toys, & stand in front of a bk trustee in a public forum where that trustee grills the debtor *under oath* about their posessions, with complete authority to seize anything he wants to pay those bills.

I understand hind sight is 20/20 and you already own this so instead of spending too much time crying about this matter what I would do is quickly scrape up 4k to 6k and get something going on this matter even if it means add a little debt or hustle a favorite hotrod.

After you get a money judgement, you can file for a "judgement debtor's examination".

You may use profit to pay down debt or you could use interest only financing and put it in your pocket.Cash on cash is what you have left after expenses and debt payments.

She said it was caused by a divorce, which I didn't see record of but I suspect may have been back when she lived in CA, so maybe the bankruptcy filing records is there, too.Bankruptcy is regional, so the local courts don't have the bankruptcy cases; but if a debtor is defending against a judgment, the "suggestion of bankruptcy" is a tactic used to let the local court to issue a stay (sometimes only to stall and delay the inevitable).If the BK is discharged, I like to see that a person has gone through some time with good rent payments with another landlord; 12 to 24 months minimum.

I hold a note(deed of trust), within my SD-RA, that is due at the end of January 2013.The debtor, a Real estate investor LLC, states that they can not repay the note because they have not sold the house and that they want another extension.

Did the debtor file "pro se" or use a BK attorney??

Flipping seems easy because most of the financing deals are all debt or a "simple" hybrid.