Imagine this scenario. You are have been working on helping a home owner out of foreclosure via a short sale. It has been 6 loooooooonnnnnnggggg months and the bank is still dragging their big corporate feet and you can't get your home seller out of trouble fast enough.
The home owner is in distress and is really feeling like the short sale may not go through, preventing you to buy the house and prevent them from escaping the foreclosure. THEY GET SCARED AND WORRIED... "What should I do???", the home owner is thinking to themselves. "I can't believe this is happening".
Truth is, this is the very nature of short sales, but the pre-foreclosure process is a very emotional and trying time for the home owner. They get desperate. "I know!!", says the home owner, "I'll file for bankruptcy so the bank can't take my house!". This thinking is correct in some respects. Correct that it will delay the process of foreclosure. Incorrect that it will stop the foreclosure indefinitely.
As an investor, you should be educated on the basics of bankruptcy when it comes to real estate investing. If the home owner that you are dealing with ever travels down this path, you should make you sure you are working with a bankruptcy attorney who knows what they are doing.
To listen learn about bankruptcy law regarding real estate and the "3 Secrets to Investing in Bankruptcy Real Estate",go to the link below.