Is It Safe To Buy Assets Off of A Bankruptcy Company?

OlufisayoJuly 2, 20210248 views

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People interested in buying foreclosed properties have several outlets where that class of real estate can be located, but if your interests lie elsewhere, how do you go about finding the assets you are looking for?

Understanding What an Asset Is

When someone declares bankruptcy, their belongings are sold to pay their creditors. Everything except what falls under a bankruptcy exemption can be sold, although people who file for Chapter 7 bankruptcy tend to keep all their belongings. Those assets that do get sold are divided into three distinct types. These are:

Personal Property

This refers to all that the individual declaring bankruptcy owns that can be touched or moved. It includes their clothes, jewelry, furniture, even their car.

Real Property

This can either be land or property built on the land. Some jurisdictions consider mobile homes personal property.

Intangible Property

This category includes everything from life insurance policies and investment accounts to money in the bank.

Finding Opportunities in Assets Held by Bankruptcy Companies

If you are looking for a profitable investment opportunity, you may find some interesting bargains in assets held by bankruptcy companies. Whether you are looking for a certain piece of equipment or inventory for your business or are doing this as an individual looking to increase a collection of specific items, this may be a cost-effective way to efficiently get your hands on a valuable asset.

Still, it is important to note that this process is more complex than when you make a straight purchase from a vendor or from a business that has not declared bankruptcy. By doing some due diligence before buying the asset, you may find something that is really worth your while.

The complexity starts when you find out that you are competing against other interested parties who want to get their hands on whatever interests you. You may also find that in order to purchase that particular asset, you require court approval.

This means that the transaction will take longer than if you simply purchased this item from a solvent company or individual. If you are in a rush to acquire this asset, you may have to consider looking for it somewhere else or buying something similar if this is a one-of-a-kind piece.

In other cases, you may find that the bankruptcy company is holding an auction to sell the item that you are after in order to obtain the highest price for it. You may decide to make an initial bid and wait to see if it is accepted or wait until the bidding has stopped to make an even higher bid, assuming that opportunity would still be open to you.

By far, time may be your largest and least predictable risk when buying assets from a bankruptcy company. Once the bankruptcy is filed, protracted negotiations may start among the different parties, unexpected claims may arise regarding these assets, and further litigation may be called for. If you are interested in a specific asset held by an individual or a company, neumannassociates.com recommends you try to approach them before the bankruptcy is filed and make your intentions known.

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