What to do if I need more time regarding a purchase money transaction with a balloon payment?

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What to do if I need more time regarding a purchase money transaction with a balloon payment?

My bond for title expires next month. I paid $29,520.00 down. Will the seller be required to foreclose on me or just file an eviction notice? If foreclosure is required, can I file bankruptcy, just so I can buy time. It is my understanding that a bankruptcy stops everything in its tracks. I have a buyer but he needs more time to close.

Asked on June 21, 2011 under Real Estate Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Speak to a bankruptcy attorney before doing anything; there are significant problems with using bankruptcy to buy time:

1) First, bankruptcy will follow you on your credit report for at least 7 years; that is, it will be a major negative that could impact getting financing or the rates you pay for credit for years to come.

2) Filing then voluntarily withdrawing or dismissing the bankruptcy, without good cause, could possibly be seen as a fraud on the court or other ground for liabilty (people are not support to file legal actions frivolously or without good cause; playing for time is not good cause in this context); hence you may have to follow through with the bankruptcy.

3) If you follow through on the bankruptcy, either assets will be liquidated for the benefit of creditors (chapter 7) or you will have to abide by a court ordered plan for 3 - 5 years.

4) While bankruptcy does stay foreclosure, it is only a temporary stay...but at the same time, you might not be able to consumate the transaction while in bankruptcy court, so this may not help you.

You need expert guidance before deciding on a course of action. Good luck.


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