Automatic Stay- a Strong Tool.
Posted by Kevin on May 23, 2011 under Bankruptcy Blog | 
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It is the law that a bankruptcy filing acts as an automatic stay of most collection efforts against the debtor. But how broad is that protection? In a recent case in the Eastern District of New York (In re: Ebadi), the stay went beyond property owned by the debtor. The debtor was a shareholder of CBC Media Realty. CBC owned a commercial building which it used as collateral for a loan. The debtor personally guaranteed the loan. CBC defaulted on the loan and the creditor obtained a foreclosure judgment. The debtor was named as a defendant in the foreclosure case. Just prior to the sale, the debtor filed a Chapter 13 and notified the foreclosing creditor of the filing. The creditor went ahead with the sale anyway.
