Bankruptcy, Chapter 13: Selling A House

Question:
I try to buy a house from a seller who filed chapter 13 bankruptcy last year here in NY. (Unfortunately I discovered this fact just recently). His plan is set up for 60 months and he made payments for less than one year. Everything is prepared to close except the title company which requires a letter by the seller's trustee with his written permission to sell the house. The trustee only agrees to do this if the seller will pay off 100% of his original debts. The seller only wants to pay off the amount which is agreed in the plan so he can walk away with some profit instead of nothing. Who is right here - the seller or the trustee? Since the trustee and seller could not find an agreement, the seller tries to get a court order against the trustee. How long could something like this take? Has the seller any chance to be successful? Could the trustee appeal if the court ruled against him? I, as the buyer, have big concerns regarding the time line. I have a rate lock and commitment letter from my bank which is in danger to expire before everything is resolved. What is the best to do, from the buyer's perspective? Thanks a lot for any advice.

Answer:
> Who is right here - the seller or the trustee? They both are. The seller wants to pay the trustee the minimum he can. The trustee wants to get the most he can. They have sumbitted the dispute to the Court, which will decide. > How long could something like this take? Usually a month or two from the date the motion was filed. > Has the seller any chance to be successful? Yes, but it depends on the details. The Trustee is arguing (probably) that the house was worth more than the seller scheduled it for, and that therefore it is appropriate for him to pay more of the proceeds to the trustee. > Could the trustee appeal if the court ruled against him? Yes.





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