What Are Seller-Financing Promissory Notes?
In a seller-financing transaction, the buyer and seller agree on a sale price for the property. Instead of relying on bank financing or traditional lenders, the seller provides financing for a portion of the purchase.
The terms Seller-Carry and Seller-Finance are used interchangeably.
In a seller-financing arrangement:
-
The buyer obtains the property without bank financing.
-
A promissory note documents repayment terms—sale price, interest rates, maturity date, balloon payments, and default clauses.
-
A deed of trust or mortgage note secures repayment with the underlying real property.
-
For bankruptcy attorneys, these instruments are treated as enforceable financial assets governed by the Texas Property Code, contract law, and the Uniform Commercial Code (UCC) when assignment or transfer occurs.
Implications in a Bankruptcy Case
When seller-financed notes surface in bankruptcy:
The seller is a secured creditor to the extent of the unpaid principal.
The note and financing documentation must be scheduled, and creditors may file proofs of claim.
The automatic stay (§ 362) halts foreclosure actions temporarily.
If a default occurs, relief from stay may be requested to continue foreclosure.
In Chapter 13 cases, ongoing payments may be restructured under the plan, which can impact both the creditor's cash flow and the debtor's obligations.
If a note is sold or assigned, the buyer of the note must establish standing and perform proper due diligence on title, chain of assignments, and credit reports.
Intersection with
Real Estate and Personal Property
Although secured by real property, seller-financing notes are considered personal property assets on the creditor’s balance sheet. This distinction matters when advising clients about:
-
Property division in cases overlapping with family law.
-
Whether the note is property of the estate if held by the debtor-creditor.
-
Whether obligations are dischargeable, reaffirmed, or subject to loan modifications if the debtor is the payor.
Priority, Foreclosure Actions and Enforcement
A properly recorded deed of trust establishes lien priority. Texas law permits non-judicial foreclosure actions, which require:
1. Notice of default and intent to accelerate
2. Notice of trustee sale
3. Foreclosure sale on the first Tuesday of the month.
In bankruptcy, these steps may only proceed with bankruptcy court approval or relief from stay.
We provide seller-financing promissory note solutions that align with your legal practice:
Valuation & Due Diligence
Assess mortgage notes for present value, enforceability, and client impact
Liquidity Options
Help clients sell a mortgage note to vetted buyers for lump-sum cash, easing financial stress during a bankruptcy case
Loan Modification Support
Work alongside attorneys to create strategies for restructuring notes while preserving client interests
Professional Partnership
We provide resources that strengthen your legal strategy without replacing your role
Our Commitment
At Secured Capital Resources, we understand the complexities of seller-financed promissory notes in bankruptcy. Whether your client is a creditor seeking enforcement, a debtor navigating obligations, or a family law client handling property division involving notes, we deliver clarity and professional mortgage note solutions for bankruptcy attorneys.
Learn how we can support your practice in cases involving real estate notes, foreclosure actions, Chapter 13 restructurings, and loan modifications.
Mortgage Note Solutions for Bankruptcy Attorneys
Navigating Seller-Financed Promissory Notes in Bankruptcy Cases
As a bankruptcy attorney, you may represent clients holding or paying on seller-financed promissory notes in bankruptcy. These transactions—where the buyer and seller agree that financing is provided directly by the seller instead of a bank—create unique challenges for bankruptcy courts, foreclosure actions, and loan modifications.
At Secured Capital Resources, we provide mortgage note solutions for bankruptcy attorneys designed to simplify complex cases, protect client rights, and create liquidity options for seller notes tied to real estate.