So that is more a way you can still lose the house, even though you thought you bought it.We have had an owner declare bankruptcy on the day of the sale, but the sale went through due to the late filing.  

A lawsuit, divorce, bankruptcy, death, - all could really jam up things and cause you to not only lose your 1031 exchange but the money they are holding as well!!

They are very differentIf it’s a foreclosure it could take 12-18 months but if the property has equity the borrower will file bankruptcy (almost given).

In the first example, the asset may be priced at a 10 cap but the tenant has a high risk of going out of business before the end of their 10 year lease term so after year two, they file bankruptcy and the owner is left with a negative return as they are funding all expenses themselves and paying to re-tenant the building.

If your seller files bankruptcy after the sale and the Trustee believes the sale was fraudulent because it was for below market value and seeks to set the sale aside, I think the title insurer might deny coverage. 

Many will go into bankruptcy, people will be laid off in droves.I was visiting Thomas Jefferson's farm in VA a few weeks ago and learned that while he wrote "all men are equal" into the Declaration of Independence he also had 650 slaves working his lands.

I understand the processor bankruptcy caused a big disruption but it also seems like FTF (Upright) was overly leveraged because they've proceeded mass sell their loan book, which means if you held one of the loans that will be sold you will receive no interest until due diligence is completed and possibly a hit to principal depending on the final price the buyer pays. 

what's certain is Fed is already in bankruptcy is they follow standard accounting practice like a bank.

Explanation of Refinancing Option for Foreclosure and BankruptcyWe understand that navigating financial difficulties such as foreclosure and bankruptcy can be overwhelming.

I, personally, would consider any other option, including bankruptcy for your sister if she really has that much debt that she can't pay, rather than ask my nephew to give that much equity away and start over smaller with a much higher rate.