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 a property with major neglect, and loss in value including any assets used in conjunction with the operation of the property. Bankruptcy is costly to both the lender and the borrower and can continue for months resulting in a total loss of mortgage payments and control of the collateral.One alternative solution to consider is a program in which the Lender agrees to allow the borrower to transfer their 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} will accept financial responsibility for the asset, thereby relieving the borrower of that burden. The Trustee can insure security of the asset and continue operations in order to maintain or enhance the value of the asset. AMREX, acting as the Trustee, will market and sell the business in part or whole and apply the proceeds to the creditors in accordance with priorities established by law. 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. If used properly and in the right circumstances, an ABC can be the best solution to obtain a maximum return with the lowest possible cost for the Creditors. AMREX has the experience to act as your Trustee and administer the complexities that are most often associated with an ABC.

Types: There are three types of assignments subject to the terms and conditions of the Trust Agreement.

1. General Assignment: The transfer of all of the debtor’s property for the benefit of all the creditors.
2. Partial Assignment: The transfer of only a designated part of a debtor’s property to benefit creditors.
3. Special Assignment: The Transfer when property is assigned to benefit only one or designated creditors.

Contact:
Chris Hice
(828)557-2802
AMREX Properties, LLC

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.