Has Your South Jersey New Home Builder Gone Bankrupt?

I watch for questions on a consumer-focused website and answer those that I find compelling.  This question asked today breaks my heart, and unfortunately many folks are finding themselves in the same dire straits as the Mullica Hill home buyers who asked it.

Here's the transcript of their question and my answer. If you have additional feedback, or have experience with this scenario, I'd love to get your input as well.

"We are having a new home built and recently found out that the builder has filed for bankruptcy. We did make a deposit but they have not started building yet. I am very skeptical and want to cancel the contract and get my deposit back. My husband is more optimistic and is williling to work with the situation. Any advice?"

Dear Ca,
I have not had an opportunity to read all of the other responses but here's my two cents:

RUN!!! If you can get the deposit back, get it and immediately cancel the contract. But I doubt they'll return it.

Frankly, if they've already filed for bankruptcy they are not allowed and not required to give you the deposit back as they have to account for all funds and cannot disperse to some creditors but not others; they're not required because bankruptcy gives them protection from their creditors - YOU - until a court-appointed trustee works out a plan. You'd have to file a proof of claim and get in line.

My guess is that they sense your husband's willingness to continue and may be preying on that -sorry I'm a realist and a bit jaded from what I've seen people go through recently with banks and builders in the last couple of years.

My suggestions:
1. File a complaint with the NJ State Attorney General's office to get the help of consumer protection agents. Chadd Lackey, Esq. is a friend, and an attorney there. You can tell him Kim Thomas told you to call and he will help you or point you in the right direction;

2.. Get your own attorney, like YESTERDAY!

3. Start a paper trail. It is very important that you send a demand letter, in writing and by certified mail, to the builder with any demand you may have -- to get your contract canceled, to get your deposit back, etc.

4. Click on the link below in web references to an attorney's answers to others who found themselves in the same situation as you now face.

Standard disclaimer: I am not an attorney and nothing I've said in this response should be interpreted as legal advice. it is general information and you should contact an attorney of your choice as soon as possible.

Thanks for the opportunity to assist you!

Kim

Kimberly Thomas, Broker
Realty Executives, Brown & Pope
1101 Laurel Oak Rd. Ste. 110
Voorhees, NJ 08043 http://www.KimThomasHomes.com
Read my blog at: http://www.ActiveRain.com/voorheesbroker