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What happens during bankruptcy?

Montevideo, MN |

We are renting a home from a couple who will be filing for bankruptcy. The sheriffs sale is scheduled for nov 8th and we are wondering how this will affect us? We would also be interested in purchasing the home in the future.

Attorney Answers 4

Posted

You have asked a very broad question & I can tell you that what happens during bankruptcy is a discussion that takes at least a year in law school. Then you start to practice and come to realize that anything can happen & often does.

If your landlord files bankruptcy before the foreclosure sale, the foreclosure will be delayed. The landlord may be able to arrange to keep the property or the foreclosure may simply be delayed for several months. No way for you or anyone else to know, because what the landlord wishes to do may not be doable.

If you want to buy the property, show up at the foreclosure sale with a cashier's check to bid on the property. If the bankruptcy hasn't been filed, you could be the lucky winner.

Hope this perspective helps!

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Posted

Ms. Bunce is correct that your question requires an answer that is far too broad for this sort of forum because we do not know enough to answer with any specificity. Are they filing a Ch7 or 13 or 11? Do you know if they intend to keep the property or surrender it? When do they plan on filing?

The one thing that should not be affected is your credit nor your chances for buying a home in the future, though it may affect your ability to buy that home, but so would your ability to buy that home be affected by a foreclosure sale.

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Posted

Several possibilities here. If the property is upside down then they will probably surrender it. Often times that means you need to find a new place to live. once they file you will receive a notice and then the trustee becomes the landlord.

This answer does not create an attorney client relationship between you and I. I am not your attorney unless we both sign a written contract that describes our relationship and terms of the representation. Any information provided to you here is not a substitute for the advice you need to pursue any legal matter. I advise you to retain the services of a local attorney before taking any legal action in this matter.

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Posted

There is no way to know. If the owners are under water on the mortgage(s), then they are probably surrendering the house. That means, then, that the mortgage lender and/or the bankruptcy trustee will step in as your landlord - your payments will go to them. Eventually, the house will be resold, and you can certainly attempt to purchase it at that time. I cannot tell you when they will demand that you vacate the property - that depends on your lease, whether the lender or trustee want someone there maintaing the property, etc.

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