The bankruptcy filing of the Tucson-based property investment firm Deed and Note Traders LLC had little to do with the company’s past legal settlement, and much more to do with mortgage market troubles, the company told creditors today.

Creditors had the opportunity to grill David Kinas, president of Deed and Note Traders.

The company, which previously operated a foreclosure rescue service under the name HomeSavers, filed for Ch. 11 bankruptcy protection on Sept. 7.

Today was the company’s 341 meeting, named after a section of the U.S. bankruptcy code. The meeting, which is presided by a U.S. Trustee, gives creditors a chance to do some fact finding. The debtor’s answers are under oath.

Creditors represented at the meeting included Wells Fargo and small-time investors who had loaned money to Kinas to purchase properties.

Foreclosure rescue was only part of Kinas’s business. Deed and Note Traders also buys, rehabs and sells properties.

The foreclosure rescue deals, in which sellers in danger of foreclosure sold properties to Deed and Note Traders and entered rent-to-own contracts to buy back their houses, came under scrutiny by the Attorney General’s Office.

In a suit filed in 2006, the office alleged that the company paid nominal amounts for the properties and tried to prevent the sellers from getting their homes back.

In a settlement, Deed and Note Traders agreed to pay fines and restitution, and to allow sellers to buy back their properties at a discounted price.

One creditor’s attorney asked Kinas whether a settlement with the Attorney General’s Office had anything to do with the bankruptcy filing.

Kinas said the impact was “minimal” at most.

The reason for filing, he said, was a slow real estate market and tightening of mortgage standards.