Legal Question in Bankruptcy in North Carolina

I am in the process of completing a short sale purchase on a home, I have just found out that the one of the co-owners has filed for bankruptcy. I have a current executed contract to purchase with both co-owners that was signed prior to one of the owners filing for bankruptcy.The mortgage is more than the value of the house so no equity is available for either co-owner. Can the sale proceed without involvement in the bankruptcy process?


Asked on 10/11/10, 8:15 pm

1 Answer from Attorneys

Thomas Zimmerman Zimmerman Law Office

No, you cannot give good title to the buyer as the sale would be a violation of the automatic stay. Perhaps that would become moot at the closing of the bankruptcy case, but the proper procedure is to secure consensus from the trustee and the debtor's counsel, including a signature on an agreed order to allow the sale. Then, just file the motion to lift stay along with the order. Some courts require that you pay the fee, but the order will be entered and allow the sale. At the same time as seeking the agreement to lift stay from the trustee, you need an abandonment. The abandonment is mailed out on a 10 day negative notice to the creditor body. You should have counsel for this. The alternative is to secure agreement with the buyer that he/she will wait until the closing of the bankruptcy case (about 4 months from filing unless there is some complication) If you secure the abandonment from the trustee, then you can proceed following the entry of the discharge order. (about 3 months from filing).

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Answered on 10/18/10, 6:31 am


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