Q: What are my rights on a promissory note on a property I invested in
I invested in a property to which I have a promissory note and after the 6 months, I would be receiving my investments back plus the interest. The promissory notes specifically states the address of the property I have the note against. 5 months in to the agreement, the debtor sold the property and filed for Chapter 7 bankruptcy.
I never put a lien on the property so not sure of the next steps. Can I put a lien on the property now since I have a valid promissory note or should I wait for the Meeting of Creditors for the next steps?
A: Basically you have an unsecured debt in bankruptcy but you may be able to be paid out of the proceeds of the sale. Was the property the homestead property of the person who sold? My advice is to immediately retain an attorney who understands real estate, contracts and bankruptcy law and have them review whether an argument can be made that the funds from the sale inure to the benefit of the promissory note and the debtor should be required to pay the debt from the funds. You may also be able to object to dischargeability of the debt if the facts fit. Don’t just give up.
Bruce Alexander Minnick agrees with this answer
A: Your scenario sounds as if this deal was put together without the aid and assistance of a lawyer, and no you appear to be in a heap of hurt. It appears that your note is totally unsecured because you put no lien(mortgage) on the property.
My suggestion is that you contact a bankruptcy lawyer to see what can be salvaged. The meeting of creditors should last 5 minutes at the most and will resolve nothing unless your lawyer is there to make appropriate inquiries.
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