Part (3/4)
INTRODUCTION
Just as we discussed in the last article, there are short sale leads from chapter 13 and chapter 7 cases. This article will cover leads from chapter 7 cases.
AUTOMATIC STAY AND RELIEF FROM STAY
When a homeowner / debtor files for bankruptcy, the debtor is granted an automatic stay. An automatic stay prohibits creditors from taking collection activities while the bankruptcy case is proceeding. This provides immediate relief to the debtor and allows for an orderly administration of the bankruptcy estate.
If the homeowner is behind on their mortgage payments, the secured creditor will typically file a motion for relief from stay. This is a request to the court to allow that creditor to continue collection, which for real property equates to a foreclose. The court will usually lift the stay if the if there is no equity in the property and if the property is not necessary for an effective reorganization. These two conditions are typically met in a chapter 7 case. When the relief from stay is granted by order of the court, the lender can continue to foreclose. At this point, the debtor faces the difficult reality of going through a foreclosure or finding some other means of moving on from the property. In such cases a short sale is a great alternative, for reasons mentioned in the previous article (stay longer in house and potentially get cash to move).
Please note we flag the short sale as the more likely alternative in this case because there is typically very little to no equity in a property where relief from stay has been granted by the bankruptcy court. This is different than a dismissed chapter 13, which typically is used to save a home that has equity. While there are always exception to a rule, these are the general workings regarding bankruptcy cases.
FINDING RELIEF FROM STAY CASES
On Inforuptcy, you can set up alerts to track cases across the country to find cases where the relief from stay was ordered as illustrated with the image below.
Once a case has been identified, you can purchase the Party query to find the debtor’s address, attorney’s contact information and creditor’s contact information.
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Now you have all the information needed to contact all the parties and negotiate a short sale. SUMMARY As we have discussed in this article, Inforuptcy can be used as a valuable marketing and lead generation tool to find real estate sales opportunities. |