Foreclosure and Investment property

UPDATED: Oct 1, 2022

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Foreclosure and Investment property

My parents home NY and their investment property PA are in foreclosure.
They have also filed for bankruptcy. Is it possible to separate the two properties
and payoff the debt from the investment property. Or buy the investment
property from them? I’d like to save one of the properties and eventually take
ownership once the overdue debt is paid off.

Asked on October 8, 2018 under Bankruptcy Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

Once they filed for bankruptcy, which is what you indicated they did, you cannot pull out parts of their property and assets and deal with them separately; doing so is regarded as a fraud on the creditors, who have (subject to pre-existing liens and mortgages) recourse against all their assets. You have to let the bankruptcy play out--though if they do not "reaffirm" a mortgage in the bankruptcy and so the lender forecloses, at that time, you may be able to buy the property from the lender or at the foreclosure sale.
Unfortunately, the time to have purchased property from your parents was *before* they initiated bankruptcy. As stated, once they start that process, they have to let it proceed.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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