ASSIGNMENT OF BENEFITS FOR CREDITORS
The filing of bankruptcy by a borrower to avoid foreclosure happens too often. Most borrowers do not want to file bankruptcy, but if the foreclosure is scheduled they will many times file to get more time to seek a solution. This of course makes it even more difficult for them to get funds to payoff existing mortgages and eventually the lender may end up with the property with major neglect, loss in value and operating assets. Bankruptcy cost both the lender and the borrower, and can continue for months with a total loss of mortgage payments and control by the lender over the collateral.
One alternative solution to consider is a program in which the Lender agrees to allow the borrower to transfer his mortgaged asset through an “Assignment of Assets to a Trust by the Debtor for the Benefit of Creditor: (ABCs)” An assignment is simply a contract whereby the troubled entity (Assignor) transfers legal and equitable title, as well as custody and control of its property, to a third party (Assignee) in trust. The Trustee can insure security of the asset, administer a settlement, return the deed to the borrower, maintain operations, transfer the asset to the lender or sale, liquidate and apply the proceeds to the creditors in accord with priorities established by law. Unlike a Chapter 7 however, an Assignee can more easily elect to keep the business operating and maintaining the value, while he tries to re-finance or sell the company as a going business. The ABC program can easily work to insure compliance in conjunction with a forbearance agreement or as an alternative for a deed in lieu of foreclosure. ABC is the best solution to obtain a maximum return with the lowest possible cost for the Creditors.
Types: There are three types of assignments subject to the terms and conditions of the Trust Agreement.
1. A General Assignment: The transfer of all of the debtor’s property for the benefit of all the creditors.
2. A Partial Assignment: The transfer of only a designated part of a debtor’s property to benefit creditors.
3. A Special Assignment: The Transfer when property is assigned to benefit only one or designated creditors.
Contact: AMREX Receivers, (Experienced Court Appointed Receivers and Assignee/Trustees) 877-554-1330 or info@AMREXreceivers.com
ALWAYS CONSULT AN ATTORNEY
The information contained in this article is provided solely for information and should not be construed as legal advice. Any information contained herein is not intended to be a substitute for legal counsel on the subject matter. The law differs from jurisdiction to jurisdiction, and is subject to interpretation of courts located in each state. Always consult your Attorney.