Legal Question in Bankruptcy in Georgia

I loaned my son and former daughter-in-law $60K to remodel their home in Washington D.C. At the suggestion of his attorney, a DEED IN TRUST was recorded and a SECURED NOTE was signed by all.
Two years later, my son lost his job, subsequently divorced, relocated to GA which is where I also reside. Shortly after arriving, he filed for bankruptcy and has proceeded to default on ALL debts.
Thou there is enough equity in his home to satisfy the existing primary mortgage, the fore mentioned security note and then some, I am becoming increasingly concerned about how to go about recouping my investment for the following reasons:
1) Despite the deed in trust and secured note, the bankruptcy attorney failed to list the above loan as a debt or me as a creditor on my son's bankruptcy petition. I was only recently made of aware of this and the bankruptcy is well along in the process.
2) The primary mortgage is listed on the bankruptcy petition. It is also secured by a deed of trust in both my son�s and ex-wife�s name and remains so even. Title to the home was granted to my son in the divorce settlement. To date, the lender has not yet taken any steps to foreclosure on the home thou it is in default.
3) The bankruptcy trustee is gun-ho to liquidate my son�s assets including the home in D.C. and has petitioned the court to do so despite the home is occupied by his ex-wife (who�s is still financially liable per the security deed for half the mortgages and who is not a participant in the bankruptcy) and children.
The �default clause� in the note signed by my son and ex-wife states upon notification of default the borrower as 30 days to make current any past debt that is owed. If he/she does not do so �.. �the borrower shall immediately and permanently convey to the lender full legal and equitable rights to the property and grant the lender irrevocable power to sell the property without further notice or consent of borrower for satisfaction of debts secured by said property �.
Does the above clause provide me the right to sell or foreclose the property�.WITHOUT seeking permission from or involving the bankruptcy court?
If not, how can I ensure the bankruptcy court recognizes my right�s as a creditor�though I am not even listed as such on the petition?
Lastly, I assume I need a legal eagle to act on my behalf. But I am not sure if I should contact a attorney who deals with bankruptcies or one who deals with real estate foreclosures??

Asked on 7/12/11, 9:11 am

2 Answers from Attorneys

Scott Riddle Law Office of Scott B. Riddle, LLC

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First, no one here has the documents. It also appears to be a question that involves DC real estate law, so if there are questions about the documents (and validity thereof) you need to ask DC real estate lawyers. You need a lawyer in your son's case to protect your interests, especially given that you are not familiar with the Trustee's authority to deal with property of the estate. Your son committed a federal crime by not listing you as a creditor and not listing the secured debt. If there is equity in the house, beyond ALL secured debt, and after the expenses of a sale and giving the ex-wife her portion, the Trustee will sell the property. Apparently, that is happening so you need a lawyer NOW (before any hearings to approve the sale and a closing). While any property is subject to properly recorded security interests, any additional language in a contract such as the default clause you mention would not bind a Trustee. If there is equity beyond the secured debt, this may be the best way you have of getting paid after a sale, but not one here knows the details. Get a lawyer.

Answered on 7/12/11, 10:16 am

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