How is foreclosure affected if the borrower is bankrupt?
A borrower can file for bankruptcy to avoid foreclosure. The trustee cannot proceed any further in the process of foreclosure once notified of the borrower filing for bankruptcy. If the trustee continues with the process and sells the property without knowing that the borrower filed for bankruptcy, the sale becomes null and void. If the trustee wishes to continue with the foreclosure process the lender of the loan must obtain relief from the bankruptcy court.
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