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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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Can a Trustee in a Chapter 7 Bankruptcy case sell real estate

Resolved Question:

Can a Trustee in a Chapter 7 Bankruptcy case sell real estate free and clear of Judgment liens more than two years old and real estate mortgages more than three years old where the amount due onthe real estate mortgage is at lest 80% greater than the real estate subect to the mortgage?
What section of the Btcy Code gives this power to the trustee?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 1 year ago.
Hi JACustomer,
A Bankruptcy trustee can usually not sell property when the mortgage balance is greater than the value of the mortgage. Is this what is happening in your Bankruptcy case, or a Bankruptcy case that you know of?
Customer: replied 1 year ago.
dthere is no bankruptcy case yet. The debtpr is theatenint to file a Farmer's chapter 12 case if bank does offerto settle his loan on about $0.40 on the dollar and then repay it in monthlly payments over a five to twent year period. Bank commenced a foreclosure by advertisement proceeding, that takes about eight weeks, and debtor elected to convert to a Judicial Fcl., that takes an additional eighteen weeks, plus increasing attorney fees five fold. The economic effect is to increase attorney fees five fold, redusec thevalue of the collateral
Customer: replied 1 year ago.
There is no bankruptcys case yet. Lender comenced a forclosure by adertisement case. Two weeks prior to the sale debtor exercised his right to convert to a Judical forclosure sale. The effect is to delay the sale 12-18 weeks, increase lender's attorney fees five fold, increase lender's loss $8400 on interest income on the ultimate recovery, reduce the value of machinery, reduce the time lender can devote to profitable business, delay the rehabilitation of the debtor to a profitable use of his time, etc. Debtor's attorney is threatening to have him file a Chapt 12 Btcy Case to persuade lender to abandon the foreclosure. Lender plans to agressively continue the fcl until a Btcy case is filed. I do not think debtor is entitled to relief in a 12 case, or an 11. Debtor does not want a liquidation in 7. I do no think debtor can qualify for either a 7 or an 11. I doubt if his attorney knows that. Wht are the Btcy law sections that are the basis for your answer? ,dthere is no bankruptcy case yet. The debtpr is theatenint to file a Farmer's chapter 12 case if bank does offerto settle his loan on about $0.40 on the dollar and then repay it in monthlly payments over a five to twent year period. Bank commenced a foreclosure by advertisement proceeding, that takes about eight weeks, and debtor elected to convert to a Judicial Fcl., that takes an additional eighteen weeks, plus increasing attorney fees five fold. The economic effect is to increase attorney fees five fold, redusec thevalue of the collateral
Expert:  cfortunato replied 1 year ago.

Thank you for your response.

 

There is no Bankruptcy Code section that addresses the issue of under what circumstances a trustee can sell property belonging to a Bankruptcy filer. However, a Bankruptcy filing does not change the rights of secured creditors in relation to the property that is owned by a Bankruptcy filer.

If a lender has a mortgage on property, that mortgage must be paid in full before the property can be sold by anyone - including a Bankruptcy trustee.

If the property cannot be sold for at least as much as the mortgage(s) on that property, then no one, including a Bankrutpcy trustee, can sell the property.

 

I think this is what you wanted to know. If not, please let me know.

Thank you.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and other Bankruptcy Law Specialists are ready to help you

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