Owner Filed for Bankruptcy foreclosure sale was conducted

[Victor Morales]

I am studying following a foreclosure auction case. A foreclosure sale was conducted and the bidding winner got a Certificate of Sale Issued on 07/06/20

Defendant/Owner filed for Bankruptcy on 07/03/20, the suggestion of BK was filled on 07/14/20.

I was wondering if the bid winner would receive his money back and what are the next steps, I understand that the automatic stay protects the owner of the property from foreclosure

What are the possible scenarios to follow?

Thanks!

[Account Closed]

Originally posted by @Victor Morales:

I am studying following a foreclosure auction case. A foreclosure sale was conducted and the bidding winner got a Certificate of Sale Issued on 07/06/20

Defendant/Owner filed for Bankruptcy on 07/03/20, the suggestion of BK was filled on 07/14/20.

I was wondering if the bid winner would receive his money back and what are the next steps, I understand that the automatic stay protects the owner of the property from foreclosure

What are the possible scenarios to follow?

Thanks!

The owner has up to one minute before the sale to properly file a 1st bankruptcy to "stop" the sale. That can be done by the owner in person at the bankruptcy court with little risk or by a bankruptcy attorney by electronic filing, but he'd better have his act together if he does so. The attorney naturally is held to a higher standard.

If the owner has filed a previous bankruptcy and the bank got a "relief from stay" the 2nd filing may or may not stop the sale depending on the interpretation of the jurisdiction the bankruptcy was filed in or the interpretation of the foreclosing attorney or of the bank, all of whom can declare the sale "invalid" and then they fight it out in court if they disagree.

 If a sale was "held", once the foreclosing attorney is made aware of the bankruptcy filing, they check to see if a previous filing had occurred and if the property had a "relief from stay". If there was no previous filing and if the filing was before the sale, even if the attorney found out hours or a couple of days later, the sale is "canceled" and money is refunded to the winning bidder if there was a bidder. The bank can then "reset" the foreclosure sale for a future date pending the outcome in court of bankruptcy proceedings.

Then you wait and see how the bankruptcy progresses. Slowly, painfully and eventually it is either confirmed, dismissed or discharged.