What is the length of time after filing chapter 7 bankruptcy you have to wait until obtaining an asset?

Asked almost 2 years ago - Berrien Springs, MI

I filed for bankruptcy on 11/4/11. Foreclosure had already started on my home so it was included. My house went to the sheriff sale on 2/23/12. Michigan has a 6 month redemption period, which I am currently in and will end on 8/23/12. After the deed was transferred back to Chase, I found out that they are willing to sell the property for half of what they originally wanted. I found someone to purchase the property and rent it to me, but was told the property would be redeemed in my name, not deeded to the person providing the funds. My question is how long do I have to wait until an asset is in my name? The deed would be transferred to the new buyer as soon as possible. Is it 6 months from the time of filing for bankruptcy, the date of the hearing or when I received the discharge?

Attorney answers (4)

  1. Charles J. Schneider

    Pro

    Contributor Level 7

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    Answered . This is a more complicated question then being answered. It sounds as if you exercized your statutory right of redemption and borrowed money to buy out the redemption. If you have the asset your (home) never left your hands and that you own it free and clear of the mortgage that foreclosed on it. If my assumptions are correct you can transfer the property today provided the Trustee has closed the estate.

  2. Robert E. Lee Wright

    Contributor Level 7

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    Lawyer agrees

    Answered . You are free to purchase any assets the day after you file bankruptcy. The six-month window is only for inheritances, life insurance proceeds and property received in a divorce. That window opens the day the bankruptcy case is filed and closes 180 days later.

    Please note that THESE COMMENTS ARE NOT INTENDED AS LEGAL ADVICE and are for informational purposes only. This... more
  3. Jeffrey D. Holst

    Contributor Level 2

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    Lawyer agrees

    Answered . The other answers are correct but incomplete. If you redeem the property you run the risk of the trustee later claiming your right of redemption. There is no actual limit to the time that the trustee can make this claim, however if your right of redemption was exempted and the trustee has abandoned the claim then the other answers are correct.

    On the other hand if you purchase an asset, say a different home, or if someone buys the home after the redemption period and then sells it to you, then there is no issue even if that took place the minute after the BK was filed.

    In summary any new assets you purchase are free of any possible claim from the trustee who only has claim to assets of the Bankruptcy estate. Technically even the mentioned inheritance issue is only true because the law specifically provides that it becomes part of the BK estate. Hope that helps. Generally though I would exercise extreme caution before redeeming the property and would recommend you get in touch with your BK attorney.

  4. Robert A. Stumpf

    Contributor Level 19

    1

    Lawyer agrees

    Answered . For most assets (there being certain unusual exceptions, like the receipt of inheritance proceeds), the day after the bankruptcy filing would work. You don't have to wait until a discharge is granted or even really the hearing.

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