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Bankruptcy Law/2 questions, Chapter 7 & Foreclosure

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Expert: - 3/29/2008


Question
My spouse and I filed Chapter 7 and included our home as well. We will be discharged May 08. Will the home show on our credit as foreclosure once the home offically forecloses?  Or will Chapter 7 and foreclosure show at the same time?  The reason of this question is were looking to going into a rent to own and they want you one year out of bankruptcy and two years out of foreclosure with that being said, I'm wondering if that means we have to wait three years instead of one.  The company that does the rent to own cannot answer this question for me.  Please help!

Answer
I don't think anyone can answer this question adequately. The basic rule is that a credit report can say anything about your credit, so long as it is true.

I assume that some of the "rent" money will be applied to a down payment? If so, it may be a scheme to overcharge for rent. The same house without a "buy option" should rent for less money, right?

I have seen this happen. When the time comes that the tenant must exercise the option to buy the house, they will lose their option money because they can't get the financing. In the scam, the landlord is counting on that, so they can keep the extra money that the tenant has paid. They deliberately pick a tenant a tenant who is unlikely to be able to exercise the option to buy, causing the tenant to eventually forfeit the option money. In effect, it gives them a tenant who willingly pays more than the current rental market value of the house, and they keep all of it!  

I am concerned that you are getting scammed. I doubt that these "rent to own" folks can guarantee you anything, much less that you will ever be able to buy the house, and the extra money that you pay them while you are renting may be completely lost. How do you know that they really own the house? If they do own it, maybe they are on the verge of foreclosure and bankruptcy themselves. Offers like this are often made by property owners who are in just as bad financial straits as you are!

I would like you to do a Google search on the term, "rent skimming." Scams abound in hard economic times. Watch out!

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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