During a prolonged economic downturn, no one is immune from possible foreclosure. A case in point is a Nevada church that has managed to avoid foreclosure when it filed for bankruptcy in July. Since its filing, the church has been able to work out its differences with the lender. It was reported that the church leaders filed for bankruptcy because the church was so far behind in payments that it made no sense to try to pay them off.

After the church filed, a dispute began as to whether donations made by the congregation could be considered part of the bankruptcy estate. If considered as such, those funds could be used to help satisfy the bank's claim. Most of the terms between the bank and the church are confidential but it was revealed that the church will pay out most of the disputed funds as part of the settlement. The funds will be placed into an escrow account.

According to what was released, the church must provide the bank proof that half of the settlement amount has either been raised or pledged. That needs to be done within 45 days. If this does not happen, the escrow amount will be released to the bank. The bank may also be considering filing foreclosure actions on the church's other campus, called the Seven Hills Campus.

When it comes to bankruptcy, business liquidation or other forms of financial assistance, Nevada entities have options. Some of these options, such as seen in this case, can help an entity to remain active as settlement issues are resolved. As seen here, lenders are sometimes willing to work with debtors.

Source: VEGAS INC., "Bankrupt Church at South Las Vegas settles with lender," Steve Green, Dec. 8, 2011