Part (4/4)
INTRODUCTION
In this last of our residential real estate in bankruptcy series, we’ll discuss how to find properties listed in the bankruptcy schedules, who the secured creditors are, and how much debt is owed on the property. This information can lead to opportunities to make stalking horse bids to the trustee or even purchase the secured debt from the lender.
VOLUNTARY PETITION AND BANKRUPTCY SCHEDULES
A myriad of forms is required to commence a bankruptcy case. The “petition” is the first of these and is a simple 3-page form identifying relevant information about the debtor and type of bankruptcy getting filed. Along with the petition, the debtor must file a host of “schedules” identified by alphabetical order as schedules A through J. The schedules provide a detailed breakdown of the debtors assets, liabilities, income and expenses, and other pertinent facts regarding the debtor’s circumstances.
Schedules may or may not be filed with the petition itself. Typically they are all filed together, in which case you will see a 30+ page document (or packet). However, by law, the schedules may be filed up to 14 days later (give or take a day depending on the jurisdiction). If filed separately, the petition (entry #1 on the docket) will usually be less than 10 pages.
For example, in this case, the voluntary petition was filed on November 14, 2014, while the schedules were filed on November 26, 2014.
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From the Summary of Schedules we can get a quick summary of the case. As it shows below, the debtor filed $793,960 in real property with $776,403.34 in secured debt. |
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In Schedule A - Real Property, we can dig deeper into the real property. As the schedule below shows, the debtor had a former residence located at 704 N. Acorn Way, Seneca, SC (Oconee County) (tax value shown) (foreclosure pending); a condominium located at 60 Fenwich Hall Allee, Unit 234, Johns Island, SC (Charleston County) (co-owned with ex-spouse - full tax value and debt amount shown); and an office building located at 400 Pendleton Rd., Clemson, SC (Pickens County) (tax value shown) (foreclosure pending). |
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Next, we’ll look at Schedule D - Creditors Holding Secured Claims. As this schedule below shows, there are four creditors, three of which have debt owed to them namely, BB&T Business Loans, BB&T Mortgage, and SunTrust Bank. |
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PURCHASING THE DEBT OR MAKING AN OFFER TO THE TRUSTEE Now that you are armed with the facts of the case, you can dig through the rest of the schedules and determine if there is enough equity value in the estate to provide a return to the unsecured creditors. If so, you can try to buy the secured debt and / or make an offer on the asset to the Trustee. If you are able to purchase the debt from the lender, then you’ll be in charge of foreclosing on the home to take possession of the title. That ends our four part series on buying residential real estate. Have fun hunting and finding your niche in the dynamic world of real estate and bankruptcy! |
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