The bankruptcies I am familiar with, the assets affected by the bankruptcy, not all are, were sold thru the courts and then the courts decide how much each creditor gets, most pennies on the dollar owed.
If the assets were good enough to cover debtors, there would not be need of bankruptcy, those would have been sold already for sufficient to pay everyone in full.
Not all creditors have equal standing, some come first.
I think, not the gospel truth here just think, that depending on the type of BK that the deficit between the proceeds from the asset liquidation and the amount owed to the creditors is either 1) discharged (creditors have to write off as loss) or 2) the debtors make monthly payments towards the amount owed.
How anyone decides who gets paid what is a mystery to me, but it seems sensible that creditors would be eager to get paid something.
The concept of a court ordered lifting of liens against the assets to be sold lines up with my splotchy understanding of how this works.
What great news to read that the sale is back on. Yes, more stumbling blocks but I am so happy for you!
You are my first recipient of emojis working again!!!
This would make an interesting cautionary tale for COTH the magazine, once is over. 
Hoping some of the good news, is that they have to compensate you for the sheds/outbuildings they took off the property.
Fingers crossed things move forward smoothly for you.
Thanks everyone!
That’s my understanding, too.
Mortgage, IRS, and state have first priority. The rest of the lien holders come second. There are more than 15 of them.
I’m told that it takes a long time to straighten out who gets what in bankruptcy court. I don’t know if that’s true or not. But I do know that’s why the trustees were pushing for a court order to clear the title for sale while the bankruptcy court deals with the issue of who gets what.
We added an addendum stating how much we wanted back in compensation. It was signed. No one said anything. So… no news is good news I guess? Still a pain, but at least I can put what I want where I want it now.
Man how does one get in that state? More than 15 lien holders? I can’t even imagine, tbh. I am still hoping it comes thru for you in the end!!
Right???
There are liens for stuff I didn’t even realize could go on the title of your house, like unpaid bills unrelated to the home.
I imagine a lot of the liens are a product of the BK filing but some certainly may not be.
Crazy any which way
There are also people who illegally run up huge bills in anticipation of their bankruptcy filing. I’ve known a few who tried that. However, the bankruptcy judge can disallow the charges, or the entire bankruptcy if they suspect there were fraudulent bills to get them discharged. Not saying that’s what happened in this case, but it does happen. Actually, running up the bills for bankruptcy is fraud.
My question is if a sale happens, if the title company will give title insurance, or if any other liens can be filed on the property after the bankruptcy?
I came here to say the same thing… 15 lien holders… what the EFF!?!
Hoping you get some seriously good news soon Tex. And a few drinks!!
Some people are just trash.
Just because they have a lien doesn’t mean that it is a priority lien. It just means that someone liened the home for a debt. The priority liens, like the mortgage(s) are what will get paid first, if there is enough there. The other lienholders could be SOL.
Yes, this is what I understand as well. Unfortunately the sale won’t even come close to covering those top lienholders (mortgage, IRS, state).
I think the problem with the others is they can’t get them off the title even if they are ultimately SOL, therefore they can’t transfer the title. What I keep being told is “getting them off the title can take a long time.” But I don’t fully understand the process and timeline, and I keep getting incomplete answers when I ask.
YES!!! We just recently confirmed this, because who knows what other skeletons are going to come out of the closet at this point!!! Not much would surprise me (famous last words).
What a shitshow !
I’m so sorry this has happened to your new property.
My understanding is that the leinholders either get a share of the proceeds of the sale; which your house title would then be cleared of any clouds. Any leinholders who don’t get in on the cram down, lose their rights to collect against the property. They may still have an action against the individuals, but the property would be sorted.
There may be time necessary to get all the leinholders found, noticed and sorted, but once the property is liquidated, its no longer subject to those leins.
I hope you are right @LilRanger!
I just got off the phone with my father who thinks we could be responsible for the sellers’ current and future liens forever. I told him I thought that was what title insurance was for???
I don’t know what to believe anymore.
Unless you are paying cash or some sort of highly specialized mortgage, the lender will demand a clear title with insurance. I wouldn’t be worried about that.
The BK court is going to settle everything up. And get all debts squared away (even if at a loss for those creditors). I might be worried about how long that will take. But once done the title won’t be subject to any surprise liens from previous owners.
Stay strong
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