With the problems in the economy, there are more bankruptcy filings than ever before. Whenever there is a Seller who is in a bankruptcy proceeding (Chapter 7—Liquidation or Chapter 13—Wage Earner’s Plan) there could be additional difficulties with the transactions.
Before the sale can be completed, the Seller has to obtain bankruptcy court approval for the sale. Such approval could include a bankruptcy court order abandoning the property and/or lifting the bankruptcy automatic stay. Also depending on the type of bankruptcy, the actual sale may need bankruptcy court approval.
Practice Tip: As part of the listing appointment, the Realtor should ask if the Seller is in any bankruptcy proceedings.