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Effect of Automatic Stay in Bankruptcy on Stay of Execution in Current Litigation

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    Question Effect of Automatic Stay in Bankruptcy on Stay of Execution in Current Litigation

    The question relates to a residential foreclosure matter. Foreclosure sale was held, new owner was granted order of possession, validity of sale was contested by former owner, so order of possession was stayed pending final ruling. Will former owner's filing of Chapter 7 prior to final ruling prevent case going forward leaving order of possession stayed until Chapter 7 discharge?

    #2
    Not that I'm aware of. Seems to me that if the previous owner had filed for bankruptcy prior to the foreclosure sale he would have the automatic stay. After a foreclosure sale? Everything I've read says it is too late. Perhaps others with personal experience will chime in..
    Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
    I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

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      #3
      For automatic stay questions, you look to BK code section 362 to determine if the type of proceeding your describing.

      I am not familiar enough with the foreclosure process you are describing to say for sure...but I don't think the BK would stop the post foreclosure proceeding. Reason being, it is not clear the ownership status of the house. If the house was "foreclosed" presumably the former owner is no longer the owner, as such, there is no action against the debtor (former owner) or any asset that would be part of the debtor's bankruptcy estate, hence, no automatic stay protection.

      Not sure what the end game scenario is here for this "person," Recent ruling out of California (I think it was CA) held that if there was a fraudulent foreclosure, the former owner can get damages, but doesn't necessarily get the house back.

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        #4
        Once the foreclosure sale has happened, it's over. BK will have no effect and the automatic stay will not apply. BK is not retroactive to events in the past.
        All information contained in this post is for informational and amusement purposes only.
        Bankruptcy is a process, not an event.......

        Comment


          #5
          Originally posted by frogger View Post
          Once the foreclosure sale has happened, it's over. BK will have no effect and the automatic stay will not apply. BK is not retroactive to events in the past.
          True enough, but it sounds like the former owner has filed something in state court challenging the validity of the foreclosure (why this wasn't done BEFORE foreclosure is another question) which has put a cloud on the title (the court seems to have issued some sort of injunction on the order). So, there is somewhat of an open question as to whether BK would stop the proceeding. My sense is a BK would NOT stop it based on what I said earlier.

          In any event, the original post does not have enough information to really say. The issue will turn on state law issue (the foreclosure process), not BK law.

          Comment


            #6
            Originally posted by HHM View Post
            True enough, but it sounds like the former owner has filed something in state court challenging the validity of the foreclosure (why this wasn't done BEFORE foreclosure is another question) which has put a cloud on the title
            True, but the reason that lenders foreclose is in order to obtain clear title. The foreclosure process assures a clear title. Any question about the foreclosure "should" have been done before the foreclosure was complete.
            All information contained in this post is for informational and amusement purposes only.
            Bankruptcy is a process, not an event.......

            Comment


              #7
              There may be a redemption period at issue.

              Comment

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