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Michigan Bankruptcy Blog

Beware of the Sheriff Sale Realtors after you have filed Bankruptcy!

Posted by Peter Behrmann, Esq. On August 28th

Beware of the Sheriff Sale Realtors after you have filed Bankruptcy!

 

This is becoming more and more of an issue, so I am writing to share this issue with you.  If you have filed for Bankruptcy, specifically Chapter 7 Bankruptcy in Metro Detroit and made the decision to “Surrender Your Home” you need to continue reading.

 

When you filed Chapter 7 Bankruptcy all of your property including your surrendered home became property of the bankruptcy estate.  This means that the home you no longer want is property of your Chapter 7 Bankruptcy estate.  Property of your bankruptcy estate is controlled by your Chapter 7 Bankruptcy Trustee.  For 99% of my clients this is not an issue, they can simply stay in the home until the bank forecloses by way of a Sheriff Sale.  Then they still remain in the home for the 6 months redemption period following the Sheriff Sale. 

 

At the Sheriff Sale the bank has two options, they can either bid the amount you owe on the home or they can bid fair market value.  If the bank bids what you owe on the home, you will most likely be left alone from the Sheriff Sale Realtors due to the bank bidding more than your home is worth.  In this scenario you should be able to remain in your home for the remaining 6 months and then leave your property.

 

Now there is the bidding fair market value approach.  In this scenario, the bank bids what they think is fair market value; however what the Bankruptcy Trustees and realtors have been learning is that the bank has a bad habit at severely undervaluing their properties.  I have seen banks bid anywhere from $20,000 to $150,000 less then what your property is worth.  If this happens to you, you will know.  Sheriff Sale Realtors will begin showing up at your home 24/7 trying to convince you to list your home for sale with them.  I have seen realtors pay people to leave their home and turn over the keys to them.  All of these realtors will promise you thousands of dollars and you may think that this is too good to be true. 

 

Well it is too good to be true.  Remember you filed Chapter 7 Bankruptcy and all of your property (including your home you are surrendering) is property of the bankruptcy estate.  You do not have the right to sell, transfer, or cut a deal with any Sheriff Sale Realtor.  You need to meet with your bankruptcy attorney to discuss your options.  The good news is you most likely have exemptions available to help protect the new equity now in your home.  I have had clients in this very situation receive a check for over $10,000 for working with their Bankruptcy Trustee.     

Peter Behrmann is a Livonia Bankruptcy Attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy, and Foreclosure Prevention.