Recessions and Real Estate WHEN BANKRUPTCY COULD BE THE BEST OPTION
By Bruce Kellogg
THE “AUTOMATIC STAY” When a debtor files a petition for bankruptcy court protection from creditors, an “Automatic Stay” is created. Creditors must stop, or not initiate, any collection action for 30 days. This begins the day and minute the court clerk stamps on the filed petition, and it covers every type of collection action. This is useful for investors to delay a foreclosure in order to negotiate, refinance, or complete a sale. Usually, the benefit is temporary.
THE “341 MEETING” After the petition is filed, the court schedules a meeting of creditors called a “341 Meeting” based on the Bankruptcy Code. It is held in a meeting room, or the courtroom. Any creditor or attorney can attend. The judge is not always there in a Chapter 7 or Chapter 13 bankruptcy because a Trustee conducts the meeting. The debtor is sworn in, and creditors and their attorneys can interrogate the debtor. The questions usually start with, “What about…?” The debtor’s
his spring when the recession started and soon deepened due to businesses closing, unemployment rising, rent and foreclosure deferments, and loan forbearances, some investors have faced (or will) the prospect of losing their properties. One method for dealing with this is filing bankruptcy. And it’s not all bad. This article describes the bankruptcy process, and provides some insights for readers to consider. Legal advice is not being given here.
58 | think realty magazine :: june 2020
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