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Question: “A DEBTOR IN BANKRUPTCY HAS A 10 INTEREST IN A PROPERTY IN FORECLOSURE. THE LENDER WENT TO SALE TODAY WITHOUT EVER FILING A MOTION FOR RELIEF OF THE AUTOMATIC STAY... AND THE BANKRUPTCY IS STILL ACTIVE, WHAT MUST THIS CLIENT DO TO REVERSE THE SALE. PROPERTY IS IN CALIFORNIA”
Answer: The client must file an “adversary proceeding” against the lender for violating the automatic stay. If the client proves that the stay was violated, then the judge will likely order that the sale be stopped, and he may also order the lender to pay the client damages.
An adversary proceeding is initiated by filing a Complaint in the bankruptcy court. It is basically a mini-lawsuit within the confines of the bankruptcy case.
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