How is this going to screw me over? **UPDATE**

[bignateyk]

ok, so I went house hunting about 3 months ago and found one I really liked. I put in an offer for about $10K under asking, and eventually got it for about $6k less than asking price. (housing in my area hasn't really been affected by the recession.).

The seller and I agreed on a closing date of about 3 months later (next week, july 15). I requested this because I have an apartment lease that goes until August.

Everything has been worked out, all the inspections done, etc... He even had everything fixed in the house that we agreed upon that turned up in the inspection.

Fast forward to yesterday. I get a call from my realtor telling me that he just found out the seller declared bankruptcy 2 days ago.

WTF? Why the hell would he declare bankruptcy a week before selling his house at a 30K profit from when he bought it 5 years ago?

Am I missing something? Is this going to fuck me over? I bought the house for pretty much market value. Is this going to delay closing by months?

My realtor said he thought it wouldn't delay closing since it was bought for close to market value, but said it was a possibility.



**update**

Well, it looks like this is going to take weeks to get straightened out. After finding that out, I talked to my attorney and told her to relay some information to the bankruptcy attorney:

"If i'm not in the house in some fashion or another by July 25th (10 days after original closing), I'm going to take my $1500 (the deposit) and walk."

After hearing that, I guess they realized they stood to lose quite a bit of money since the house would not likely sell for anywhere near as much money, and it looks like they are now prepared to let us move in rent-free until closing can be arranged.

 

[krylon]

no

 

[Safeway]

That is somewhat weird. Maybe he was just waiting to sell the house to declare bankruptcy? Maybe he didn't want that profit from the home on file when he declared?

Who knows.

 

[SearchMaster]

Originally posted by: bignateyk
ok, so I went house hunting about 3 months ago and found one I really liked. I put in an offer for about $10K under asking, and eventually got it for about $6k less than asking price. (housing in my area hasn't really been affected by the recession.).

The seller and I agreed on a closing date of about 3 months later (next week, july 15). I requested this because I have an apartment lease that goes until August.

Everything has been worked out, all the inspections done, etc... He even had everything fixed in the house that we agreed upon that turned up in the inspection.

Fast forward to yesterday. I get a call from my realtor telling me that he just found out the seller declared bankruptcy 2 days ago.

WTF? Why the hell would he declare bankruptcy a week before selling his house at a 30K profit from when he bought it 5 years ago?

Am I missing something? Is this going to fuck me over? I bought the house for pretty much market value. Is this going to delay closing by months?

My realtor said he thought it wouldn't delay closing since it was bought for close to market value, but said it was a possibility.

I think that's the key. My understanding is that bankruptcy judges have the right/obligation to review any sales for 90 days (IIRC) up to the bankruptcy. Obviously they don't want somebody giving their crap away to friends for virtually nothing to "hide assets" in essence.

 

[tyler811]

Will not affect you but the seller is a piece of shit. He has the house closed and now declares bankruptcy to avoid paying taxes on the sale, fucking over everyone he owes and walks away a rich man. This is part of the reason the economy went to shit. People not paying for what they have. This fucker needs some sense knocked into him or the shit kicked out of him.

 

[Old Hippie]

He has the house closed and now declares bankruptcy to avoid paying taxes on the sale, fucking over everyone he owes and walks away a rich man.

I'd of never thought of that.

I guess it shows how much larceny, or ignorance, is in my heart.

 

[spidey07]

Originally posted by: Old Hippie

He has the house closed and now declares bankruptcy to avoid paying taxes on the sale, fucking over everyone he owes and walks away a rich man.

I'd of never thought of that.

I guess it shows how much larceny, or ignorance, is in my heart.

Not only that but the proceeds won't be counted as assets because he declared before the sale. Pretty smart actually.

 

[bignateyk]

I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

 

[spidey07]

Originally posted by: bignateyk
I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

Why wouldn't he? It's still his house and he still gets the proceeds of the sale. Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

 

[bignateyk]

Originally posted by: spidey07

Originally posted by: bignateyk
I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

Why wouldn't he? It's still his house and he still gets the proceeds of the sale. Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

wtf.

I wish they would bring back debtors prison.

 

[Old Hippie]

Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

There's a coupla different kinds in Ohio but I thought when you kept all your stuff, you still had to pay a percentage?

 

[amdhunter]

Good for him. In this economy, every little bit helps.

 

[Corporate Thug]

Originally posted by: bignateyk

Originally posted by: spidey07

Originally posted by: bignateyk
I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

Why wouldn't he? It's still his house and he still gets the proceeds of the sale. Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

wtf.

I wish they would bring back debtors prison.

And tax non-debtors to death to pay for prison costs :laugh:

 

[Safeway]

Bankruptcy is a crock. What happened to survival of the smartest?

 

[Howard]

Originally posted by: Corporate Thug

Originally posted by: bignateyk

Originally posted by: spidey07

Originally posted by: bignateyk
I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

Why wouldn't he? It's still his house and he still gets the proceeds of the sale. Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

wtf.

I wish they would bring back debtors prison.

And tax non-debtors to death to pay for prison costs :laugh:

Abolish the war on drugs and use the taxes from recreational drugs in combination with the reduced spending to lock 'em up forever.

 

[spidey07]

Originally posted by: Howard

Originally posted by: Corporate Thug

Originally posted by: bignateyk

Originally posted by: spidey07

Originally posted by: bignateyk
I don't get it though. The house isn't closed on until next week, and from what I understand, he is out of the picture now, so he won't see any of the profit for the sale.

Why wouldn't he? It's still his house and he still gets the proceeds of the sale. Declaring bankruptcy doesn't mean they take all your stuff, it just means you proved you can't pay your obligations but you still get to keep everything.

wtf.

I wish they would bring back debtors prison.

And tax non-debtors to death to pay for prison costs :laugh:

Abolish the war on drugs and use the taxes from recreational drugs in combination with the reduced spending to lock 'em up forever.

That right there would get you elected. Howard for Pres! Start as state governor first.

 

[sactoking]

He is NOT guaranteed to walk away with that money. The moment he filed BK, all of his property was put under an automatic stay. None of it can be transferred or tapped w/o the court's approval. Since you had an existing contract to purchase at near-market prices, the judge should allow the sale to go through without worrying about preference. But since he will still be in open BK, the sale will be considered as part of his reorganization plans.

Your state may have some sort of homestead exemption, and if it does, he'd be likely to keep his house or a portion of the proceeds regardless. The only way he'd be off "scott free" is if he emerges from BK BEFORE your sale closes, which is doubtful since the pending contract would need to be disclosed in court.

 

[olds]

Aren't declaring bankruptcy and having a judge grant bankruptcy two separate things? Doesn't it take months?

 

[IronWing]

Originally posted by: sactoking

Your state may have some sort of homestead exemption, and if it does, he'd be likely to keep his house or a portion of the proceeds regardless. The only way he'd be off "scott free" is if he emerges from BK BEFORE your sale closes, which is doubtful since the pending contract would need to be disclosed in court.

This is my guess as to why the seller declared bankruptcy prior to sale. Right now the house is a house, likely not touchable in bankruptcy (assuming he lives in it). If he sells it, he has a wad of cash, subject to being distributed to creditors during bankruptcy.

 

[halik]

Originally posted by: bignateyk
ok, so I went house hunting about 3 months ago and found one I really liked. I put in an offer for about $10K under asking, and eventually got it for about $6k less than asking price. (housing in my area hasn't really been affected by the recession.).

The seller and I agreed on a closing date of about 3 months later (next week, july 15). I requested this because I have an apartment lease that goes until August.

Everything has been worked out, all the inspections done, etc... He even had everything fixed in the house that we agreed upon that turned up in the inspection.

Fast forward to yesterday. I get a call from my realtor telling me that he just found out the seller declared bankruptcy 2 days ago.

WTF? Why the hell would he declare bankruptcy a week before selling his house at a 30K profit from when he bought it 5 years ago?

Am I missing something? Is this going to fuck me over? I bought the house for pretty much market value. Is this going to delay closing by months?

My realtor said he thought it wouldn't delay closing since it was bought for close to market value, but said it was a possibility.

You probably won't get the house. The guy probably just foreclosed/ will forreclose on it as part of the bankruptcy and will be living in it for free for 6 months (new Obama rule IIRC) or until the judge decides what his liabilities are.

 

[halik]

Originally posted by: ironwing

Originally posted by: sactoking

Your state may have some sort of homestead exemption, and if it does, he'd be likely to keep his house or a portion of the proceeds regardless. The only way he'd be off "scott free" is if he emerges from BK BEFORE your sale closes, which is doubtful since the pending contract would need to be disclosed in court.

This is my guess as to why the seller declared bankruptcy prior to sale. Right now the house is a house, likely not touchable in bankruptcy (assuming he lives in it). If he sells it, he has a wad of cash, subject to being distributed to creditors during bankruptcy.

I thought PA doesn't have special rules for real estate - house is a fair game as an asset?

 

[TipsyMcStagger]

The guy hasn't gotten away with anything, he filed for bankruptcy, he wasn't granted a bankruptcy judgment. Its a temporary thing, its actually a lot harder to get a bankruptcy judgment since the new laws passed in 05, you have to really make almost nothing compared to your debt. Plus they do look into things like where the money went on the sale of the house right before he filed.

 

[bignateyk]

All I know is i'm gonna be mighty pissed if my closing gets delayed because of this prick.

 

[bignateyk]

Originally posted by: halik

Originally posted by: bignateyk
ok, so I went house hunting about 3 months ago and found one I really liked. I put in an offer for about $10K under asking, and eventually got it for about $6k less than asking price. (housing in my area hasn't really been affected by the recession.).

The seller and I agreed on a closing date of about 3 months later (next week, july 15). I requested this because I have an apartment lease that goes until August.

Everything has been worked out, all the inspections done, etc... He even had everything fixed in the house that we agreed upon that turned up in the inspection.

Fast forward to yesterday. I get a call from my realtor telling me that he just found out the seller declared bankruptcy 2 days ago.

WTF? Why the hell would he declare bankruptcy a week before selling his house at a 30K profit from when he bought it 5 years ago?

Am I missing something? Is this going to fuck me over? I bought the house for pretty much market value. Is this going to delay closing by months?

My realtor said he thought it wouldn't delay closing since it was bought for close to market value, but said it was a possibility.

You probably won't get the house. The guy probably just foreclosed/ will forreclose on it as part of the bankruptcy and will be living in it for free for 6 months (new Obama rule IIRC) or until the judge decides what his liabilities are.

All of his stuff has already been moved out of the house, which leads me to believe he is living somewhere else at the moment.

 

[ViviTheMage]

good luck to the seller on getting a mortgage within the next 5 + years...whats a few thousand in taxes, when you are screwed for oh, so long?? unless he plans on leaving the US or something.