Is Automatic Stay in effect for this new case?

[Andy Mirza]

I'll preface this by saying that I know that I need to get legal advice and will do so before taking any action. This situation is on a short time fuse and I need any useful information I can get.

We purchased an NPN with a recorded NOD in NV in mid-October, 2019. The borrower had filed Ch 13 BK in 2018, which was later converted to Ch 7. Our seller received an Order granting the MFR in the summer of 2018. After that, I know that the seller offered trial loan mods and the borrower failed. Finally, they recorded the NOD in August, 2019.

Upon completion of the transfer, we continued with the foreclosure and recorded a NOS. The trustee sale is scheduled for 12/16/19. Yesterday, our trustee received communication from the borrower/debtor's attorney that she filed a Ch 13 petition on 12/11/19 and requested that we postpone the sale. I thought it was strange that it was a "request" along with the standard Notice of BK filing, which has warnings about the automatic stay.

I looked up the 2018 BK and it hasn't even been discharged yet so it's still open. Does the automatic stay from this new filing apply when there's already an Order for Relief from a current BK case? My instinct is "no" but I'm not an attorney and I want to make sure I get this one right.

I want to continue with the sale on 12/16/19 and then file any motions we need to after the sale to perfect title. We did this on another loan earlier this year and it worked beautifully. 

Any thoughts, insights, or experience would be appreciated....

[Account Closed]

Originally posted by @Andy Mirza:

I'll preface this by saying that I know that I need to get legal advice and will do so before taking any action. This situation is on a short time fuse and I need any useful information I can get.

We purchased an NPN with a recorded NOD in NV in mid-October, 2019. The borrower had filed Ch 13 BK in 2018, which was later converted to Ch 7. Our seller received an Order granting the MFR in the summer of 2018. After that, I know that the seller offered trial loan mods and the borrower failed. Finally, they recorded the NOD in August, 2019.

Upon completion of the transfer, we continued with the foreclosure and recorded a NOS. The trustee sale is scheduled for 12/16/19. Yesterday, our trustee received communication from the borrower/debtor's attorney that she filed a Ch 13 petition on 12/11/19 and requested that we postpone the sale. I thought it was strange that it was a "request" along with the standard Notice of BK filing, which has warnings about the automatic stay.

I looked up the 2018 BK and it hasn't even been discharged yet so it's still open. Does the automatic stay from this new filing apply when there's already an Order for Relief from a current BK case? My instinct is "no" but I'm not an attorney and I want to make sure I get this one right.

I want to continue with the sale on 12/16/19 and then file any motions we need to after the sale to perfect title. We did this on another loan earlier this year and it worked beautifully. 

Any thoughts, insights, or experience would be appreciated....

Generally, if the court granted relief from stay, filing a new case would have no effect on the property and you could proceed with the sale. If the attorney presented you with a court order stopping the sale then of course you would stop. It's likely that the trustee of the BK from 2018 has requested that BK to be either dismissed or discharged but not yet signed by the judge and then filed. The debtor's attorney has been in contact with the trustee and knows the status. You can call the clerk of the court and get an update too.

The new filing is an attempt to stop the sale most likely. If the attorney can convince the judge to reverse the relief from stay (I've seen it done but it isn't common) then you would have to unwind the sale.