An often overlooked area for buying distressed real estate is purchasing properties in the United States Federal Bankruptcy Court. Most seminars and web sites that deal with distressed real estate teach about purchasing properties out of foreclosure and pre-foreclosure. They, however, leave out the strategy of purchasing properties out of bankruptcy. This article explores the basic differences between bankruptcy and foreclosure and why buying properties out of bankruptcy can be so profitable.
1. BASIC DIFFERENCES BETWEEN BANKRUPTCY AND FORECLOSURE
When a homeowner or business that owns real estate cannot make timely payments on the mortgage on their property, the bank will usually begin a foreclosure action. With a mortgage foreclosure, the bank is attempting to take back the real estate that secures its loan taken out by the borrower.
Depending upon which State the property is located, the property is eventually sold at sheriff sale auction or trustee auction. The bank is forcing this sale to recover the money it loaned to the person or company. Most real estate investing strategies focus on purchasing distressed property at some time during this foreclosure process.
A valuable and profitable focal point in this process, however, is left out, namely when the person or company files bankruptcy. A large percentage of people or business owners in foreclosure file a bankruptcy to stop the foreclosure. The bankruptcy is filed in the Federal Courts and stops any state court foreclosure, thus giving the homeowner or business owner some breathing room and a chance to reorganize. The bank cannot continue with the foreclosure while the bankruptcy is active.
Unfortunately, most individuals or companies that file bankruptcy to save the real estate in foreclosure cannot save it. Thus, they must either voluntarily sell it in the bankruptcy court or face losing it at a sheriff sale or trustee auction in the foreclosure process.
Many times, trustees in bankruptcy also force the sale of real estate depending upon the circumstances of the case. Under either scenario, the real estate is sold through the bankruptcy court and many opportunities to purchase properties at a discount are available. Moreover, you do not face the same level of competition with properties sold in the Bankruptcy Court that you have in the foreclosure auction area.
2. THE NEW ELECTRONIC BANKRUPTCY SYSTEM
Most important, the United States Federal Bankruptcy Court system is all now electronic on the PACER system. PACER stands for Public Access to Court Electronic Records. The information is so powerful and not taught to the general public. This information is, however, public and available to anyone who wants to tap into it and learn about it.
Mandatory electronic filing in Bankruptcy cases has created opportunities never before available in recent history in the area of distressed real estate. With the electronic filing system, if someone files a bankruptcy, the documents are in a PDF (portable document format) and viewed easily. In a short time, you can learn the value of property, any liens against that property and financial picture of the individual or company.
The speed and power in using the system to locate and buy bargain properties is unbelievable. Next to no one is yet using the system on a consistent basis to find profitable real estate opportunities. You pick up on auctions of properties that are profitable and not well publicized.
John J. Scura III is an avid Real Estate Investor and also an Attorney whose legal area of emphasis is Bankruptcy. John has developed the R.A.D.A.R. (Rapid Access to Data for Accelerated Returns) system. John helps you clearly understand all aspects of bankruptcy proceedings and shows you how to profit from real estate deals at every angle. The R.A.D.A.R. (Rapid Access to Data for Accelerated Return) system teaches how to maximize use of PACER in Bankruptcy cases to find discount opportunities with real estate. Our team of investors has consistently used the R.A.D.A.R. system to profit immensely. For information on R.A.D.A.R. and some further explanation, you can visit http://www.insideres.com or contact John via email at jscura@scuramealey.com. You can also visit John's law firm at http://www.scuramealey.com |
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