Foreclosure sale is not permitted after bankruptcy stay in Massachusetts

Lender violates Bankruptcy stay in Massachusetts

In re LINDA LYNN-WEAVER, Debtor; LINDA LYNN-WEAVER, Plaintiff v. ABN-AMRO MORTGAGE GROUP, INC., HARMON LAW OFFICES, P.C., and IRVING SHECHTMAN & CO., Defendants
Chapter 13, Case No. 06-11544-WH, Adversary Proceeding No. 06-1364

Case Law
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MASSACHUSETTS
385 B.R. 7; 2008 Bankr. LEXIS 1101

March 27, 2008, Decided

Facts: The debtor contended that the mortgagee and counsel per se violated the bankruptcy stay by rescheduling the foreclosure sale five times without first obtaining relief from the automatic stay. The mortgagee and counsel argued that the postponements occurred prior to confirmation of the debtor's plan and were only accomplished to preserve the status quo.

Issue: Whether there was violation of the bankruptcy stay

Ruling: Yes. Court held that the continuances of the foreclosure sale constituted violations of the stay. While a single continuance of the sale was not a violation of the stay if, before the continued sale date, an appropriate motion for relief from the stay was filed, the mortgagee and counsel did not move for such relief before the date to which the original sale was postponed, and thus the initial continuance, and all subsequent continuances, were violations of the stay.

Lesson Learned: A single continuance of a foreclosure sale following the filing of a bankruptcy petition is not a violation of the automatic bankruptcy stay if, before the continued sale date, the creditor files an appropriate motion for relief from stay.

Written by Kevin Levonas and Jerry L.