Legal Question in Bankruptcy in California

Real estate investor tried to do the right thing

I was a real estate investor and the business went belly-up. I've lost most of my houses to auction. The rest are in foreclosure. I qualify for BK with more than a million dollars in debt. Question: I am planning to get licensed as a real estate agent, and (stupidly?) promised my private investors that we could re-do their secured notes and I would pay them out of my future commissions. At the time, I was trying desperately to be as ethical as possible. Is this going to backfire on me? 1) I don't want them to respond to the BK court and alert the court to my future income, only to have it all garnished. 2) Can my investors hold my feet to the fire, or will the BK court's perspective be that a fresh start is a fresh start? (After all, any investor should invest without understanding there's a risk -- this isn't actually a debt, right?) There was no fraud involved. I want to file BK ASAP because I'm not licensed yet, have no transactions in escrow, and therefore no assets at the time of filing.


Asked on 12/16/00, 3:25 pm

1 Answer from Attorneys
Mark Markus Law Office of Mark J. Markus

Re: Real estate investor tried to do the right thing

This is really too complex a question for this format, but I'll tell you that the answer depends in part on which chapter you file. If you're talking about a straight liquidation under Ch. 7, you will have no obligation to the creditors unless they can prove fraud. However you raise issues that sound problematic to me regarding your future income. If you have future income that you know you're going to have, it must be disclosed. However, the pre-bankruptcy creditors, if discharged in the bankruptcy, will not be able to go after your post bankruptcy income or assets (again, unless they can prove fraud, or other elements required for nondischargeability). If you would like a free consultation, please visit my website and give me a call and we can go over this in more detail.

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Answered on 12/22/00, 12:41 am


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