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Roger
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Category: Bankruptcy Law
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In CA, when a chapter 11 bk is file the same day as the foreclosure

Resolved Question:

In CA, when a chapter 11 bk is file the same day as the foreclosure but after the foreclosure sale takes place, is the sale valid or is the stay in effect if filed the same day?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 5 years ago.

Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney here to assist you.

 

If the foreclosure sale occurred before the bankruptcy was filed, the sale is valid. The automatic stay doesn't go into effect until AFTER the voluntary petition is filed. There is no retroactivity. Also, if you don't have proof of credit counseling at the time of filing, the petition could be voided or suspended until you get that proof to the court.

 

If the sale occurred after the filing, the automatic stay would be in effect and would void the sale. However, even in this case, the sale would likely proceed as the creditor would have no idea that you filed. Even so, the sale would be voided, but it would likely take several motions and hearings before the court to straighten everything out.

 

 

Customer: replied 5 years ago.
do you have any authority for your position, as one title company stated that it would not be a valid sale if recorded the same day
Expert:  Roger replied 5 years ago.
Bear with me a moment and I'll get you a reference.
Expert:  Roger replied 5 years ago.

Here are a few citations from bankruptcy courts. As you could imagine, this is an uncommon occurrence, so there aren't many cases out there. However, the following support my answer based on bankruptcy code, which is federal procedure law, and is applied the same whether you're in California, New York, Illinois or Alabama:

 

In re Williams, 2010 Bankr. LEXIS 328 (E.D. N.Y.):

The creditor's foreclosure sale on the same day of the debtor's petition filing was a violation of the automatic stay because the debtors filed prior to the foreclosure sale.

 

In re Woodford, 354 B.R. 153 (W.D. KY.):

Debtors argue that because the foreclosure sale occurred the same day they filed their Chapter 13 petition, the automatic stay applies to the Property regardless of whether the petition was filed before or after the Property was auctioned. The court found that the Debtors' argument is unavailing.

 

In re McMeans, 209 B.R. 253 (N.D. AL.):

This cause came on to be heard on the motion for summary judgment filed by North Alabama-Bank, Inc. ("NAB") to lift the automatic stay on certain real property on the ground that the foreclosure sale on same took place prior to the filing of McMeans' petition where both events occurred on the same day. Upon due consideration of the pleadings, stipulations, affidavits, and arguments of counsel, the Court finds that there is no genuine issue of material fact in the present case and that NAB is entitled to judgment as a matter of law as NAB concluded the foreclosure sale prior to the commencement of McMeans' Chapter 11 bankruptcy case.

 



 

Expert:  Roger replied 5 years ago.

Here are a few citations from bankruptcy courts. As you could imagine, this is an uncommon occurrence, so there aren't many cases out there. However, the following support my answer based on bankruptcy code, which is federal procedure law, and is applied the same whether you're in California, New York, Illinois or Alabama:

 

In re Williams, 2010 Bankr. LEXIS 328 (E.D. N.Y.):

The creditor's foreclosure sale on the same day of the debtor's petition filing was a violation of the automatic stay because the debtors filed prior to the foreclosure sale.

 

In re Woodford, 354 B.R. 153 (W.D. KY.):

Debtors argue that because the foreclosure sale occurred the same day they filed their Chapter 13 petition, the automatic stay applies to the Property regardless of whether the petition was filed before or after the Property was auctioned. The court found that the Debtors' argument is unavailing.

 

In re McMeans, 209 B.R. 253 (N.D. AL.):

This cause came on to be heard on the motion for summary judgment filed by North Alabama-Bank, Inc. ("NAB") to lift the automatic stay on certain real property on the ground that the foreclosure sale on same took place prior to the filing of McMeans' petition where both events occurred on the same day. Upon due consideration of the pleadings, stipulations, affidavits, and arguments of counsel, the Court finds that there is no genuine issue of material fact in the present case and that NAB is entitled to judgment as a matter of law as NAB concluded the foreclosure sale prior to the commencement of McMeans' Chapter 11 bankruptcy case.

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