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Can you reverse a foreclosure sale after filing for bankruptcy?
Not if you file for bankruptcy after your home has already been sold at a foreclosure auction. However, if you file for bankruptcy right before your scheduled foreclosure sale, and your house is then sold at the scheduled sale, you do have the right to petition the bankruptcy court to have the sale voided.
Once you file for bankruptcy, the bankruptcy court automatically issues a court order known as the "automatic stay," which prevents all of your creditors from pursuing any action to recover an outstanding debt. If you file for bankruptcy right before your foreclosure sale, by law the sale must be postponed. In the event that your foreclosure sale goes through despite the automatic stay, you can turn to the bankruptcy court for relief and void the foreclosure sale.
Keep in mind that the automatic stay remains in effect only while your bankruptcy is pending. Your lender may also ask the bankruptcy court for permission to proceed with the foreclosure sale despite the automatic stay by filing what is known as a "motion to lift the stay." If the court grants the motion, the automatic stay will no longer keep your lender from moving forward with the foreclosure sale.
To find out whether you will be able to keep your house permanently after the conclusion of your bankruptcy case, see our section on How Bankruptcy Can Help with Foreclosure.
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