Chapter 7 Bankruptcy assets are administered by a duly appointed trustee who's responsible for the orderly liquidation of non-exempt property (personal and/or real) of the estate.

Even though highly unlikely to occur, all bankruptcy sale offers are subject to higher bids for approximately 3 weeks after the initial sale motion is filed with the court. If the initial buyer’s offer is out bid, that buyer may likewise raise the bid in an effort to win the asset. The following is an example of how such a circumstance might take place:

• Buyer “A” submits a written offer of $300,000 for a residential property
• A short sale is approved by the secured creditor (say, Wells Fargo) that has a mortgage lien on the home
•  The motion to sell is filed by the trustee
•  8 days later, Buyer “B” files an objection with the court stating the intent to pay more than the current offer price
•  The judge sets a hearing date when all interested buyers may appear to finalize the bidding
•  On the hearing date, an auction is held in a room outside the court room and a winning bid is determined
•  The trustee (Seller) informs the judge a winner has been declared
•  The Trustee files an order with the final sale terms and the order is signed by the judge

IMPORTANT NOTICE: All sales of bankruptcy assets require bankruptcy court approval (a judge’s signed order). In most states, that process takes about 30-45 days. If the court does not approve the sale, the entire transaction becomes null and void and any earnest money deposits that apply will be promptly returned to the prospective buyer.