Will Filing For Bankruptcy Stop Foreclosure?

Will filing for bankruptcy stop foreclosure? The short answer, yes it will. In many cases, Filing an Emergency Bankruptcy is considered the first act in foreclosure defense. While being potentially cumbersome to a home owners lifestyle; chapter 13 or chapter 7 bankruptcy are not the only ways to avoid a foreclosure sale from happening in the case of a defaulted loan.


If you need to stop a foreclosure sale fast, or you need to stop an eviction filing for bankruptcy could be an effective foreclosure defense strategy to use. If you need to file a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, or a chapter 20 bankruptcy, FRAUD STOPPERS PMA has a proven way to help you save time and money doing it. Eliminate or restructure your mortgage loan payments and save your house from foreclosure with bankruptcy. Save time and money and file for bankruptcy Pro se or file for bankruptcy with the help of a professional bankruptcy attorney. Register for a FREE Mortgage Fraud Analysis and Bloomberg Securitization today and get FREE Bankruptcy Documents and insider information and court cases that reveal how to list your property as unsecured debt in your bankruptcy for free and clear title to your home.

Bankruptcy Process in a Nutshell

First we are going to take a look into the bankruptcy Process.
Then, we are going to show you how FRAUD STOPPERS PMA members are filing there own bankruptcies for free without a lawyer, and only paying filing cost. Throughout this process many our private members quickly understand why bankruptcy may not be the best option stop foreclosure. If you feel like this may be you, have a look at the FRAUD STOPPERS PMA foreclosure defense strategies, and find the solution that best suits you, or register for a FREE mortgage fraud analysis and potential cause of action consultation to discuss all of your legal options to saving your home from foreclosure.

Bank issued Notice of Default

Once your Mortgage lender has taken the first step in legal foreclosure process, providing you with a notice of default and informing you on there intent to foreclosure, its import to assess your situation with your ideal goal in mind. Bankruptcy isn't for everyone, and it wont always save your home. In more cases than not, bankruptcy is most effective when used as a piece of an overall foreclosure defense strategy, opposed to being the solution itself.

Which Type of Bankruptcy is right for me?

When keeping you end goal in mind, selecting the right type of bankruptcy is essential to it serving its purpose in your foreclosure defense. Choosing between the popular chapter 13 and chapter 7 bankruptcies; and the new hybrid chapter 20 bankruptcy can be a challenge. FRAUD STOPPERS PMA has a resource online highlighting the major differences between a chapter 13 bankruptcy and a chapter 7 bankruptcy.

Both types of bankruptcy are better filed before a foreclosure sale has been scheduled. If you are still in default, a bankruptcy can do either one of two things.

1. Give you time to work out an alternate means of settling with your bank or find new housing.
This is typically the case when filing for chapter 7, as it focuses on asses liquidation rather than consolidation. A chapter 7 bankruptcy does release ones obligation to a debt, but does not remove an liens a lender may have on the secured instrument (the house) itself.

2. Create a path towards repaying overdue payments while also continue to make payments on the participial and interest by means of consolidated payments. This is typically the process when filling a chapter 13 bankruptcy. This may sound like a trap, but unlike the chapter 7 bankruptcy it is less of a means to an end. The order of relief filed by the courts as a response to this bankruptcy has a higher chance of of being sustained, giving this type of bankruptcy a higher chance of putting a stop foreclosure while keeping the homeowner in the home for a longer period of time.




What if you could wipe out your mortgage in a bankruptcy and still keep your home? 

You may be able to use a little know bankruptcy technique to get clear and free title to your home, and become debt free at the same time! 

Some savvy real estate investors got free properties by listing them as unsecured debt on schedule F in chapter 7 bankruptcy filings to eliminate the entire mortgage debt and walk away with clear and free title to the property.

Filing for bankruptcy can stop a foreclosure sale and or eviction, and if you do it right, could result in you getting 100% clear and free title to your home, and your mortgage totally wiped out too!

According to a University of Iowa Legal Research Study nearly 40% of the bankruptcy cases that involved foreclosures, creditors couldn’t produce the original loan documents when asked.

By the way, is how some savvy investors got properties for free, by listing them on Schedule F, as unsecured using bankruptcy rule 3001.

When "lenders" or mortgage companies would challenge this claim, the investors would simple say show me the note… and when the bank couldn’t, BINGO another free house.

Unfortunately for the average American homeowner the good old bankruptcy boys club has made it  find a lawyer to help you use this technique to getting clear and free title to your home.

However now you can do it yourself Pro Se with FRAUD STOPPERS Bankruptcy and Audit Combo Package. Get your bankruptcy documents for free here https://fraudstoppers.org/wp-content/uploads/Bankruptcy-Documents.zip


Reversing (Voiding) Foreclosure Sales in Bankruptcy

  1. Foreclosures Can Not Be Reversed in Bankruptcy as a Fraudulent Conveyance
  2. The Growing Trend – Completed Foreclosure Sales Can Be Voided (Reversed) as an Unlawful Preference
  3. Requirements for Establishing an Avoidable Preference 

(a) Transfer of property

(b) Existing creditor

(c) Antecedent debt

(d) Homeowner must be insolvent

(e) Bankruptcy Filed within 90 Days After Foreclosure Sale

(f) Property Value Must Exceed Payoff Balance Owed to Foreclosing Creditor

(g) Bankruptcy Filed Before Lender Sells the Property to Bona Fide Purchaser

  1. Do you qualify for a voided foreclosure claim through bankruptcy?
  2. Foreclosures Can Not Be Reversed In Bankruptcy as a Fraudulent Conveyance

Until recently, most bankruptcy attorneys (including the author of this article) were of the opinion that a bankruptcy filing can not be used to reverse (or void) a completed foreclosure sale unless the foreclosing creditor failed to strictly follow the foreclosure process required by Texas state law. This rule applies regardless of the price paid by the foreclosing creditor or third party at the foreclosure sale. The rule was reinforced by the U.S. Supreme Court case of BFP v. Resolution Trust Corp. , 511 U.S. 531 (1994), which ruled that the amount paid by a foreclosing lender or third party purchaser at a foreclosure sale is per se “reasonably equivalent value” so long as state law foreclosure procedures were followed. As a result, a bankruptcy court can not reverse a foreclosure sale as a fraudulent conveyance under Bankruptcy Code § 548 so long as the sale was conducted in accordance with state law.

  1. The Growing Trend – Completed Foreclosure Sales Can Be Voided (Reversed) as an Unlawful Preference

A growing line of case authority supports the view that the bankruptcy preference rules contained in Bankruptcy Code § 547 may be an overlooked tool that will now permit the Bankruptcy Court to avoid (void, undo or reverse) a procedurally valid foreclosure sale under limited circumstances. Initially, this view not accepted. Court opinions issued in the following cases rejected the legal theory that a foreclosure sale could be reserved on the basis that it was a preference. Ehring, 900 F.2d 184 (9th Cir. 1990), 900 F.2d 184 (9th Cir. 1990); FIBSA Forwarding, Inc., 244 B.R. 94 (S.D. Tex. 1999); Chase Manhattan Bank v. Pulcini, 261 B.R. 836 (Bankr. W.D. Pa. 2001).

However, the legal theory that a properly conducted foreclosure sale can be avoided as an unlawful preference has gained acceptance in recent years. It is now the majority view in the published opinions. Court opinions issued in the following cases now support the theory that a foreclosure sale can be reversed as a preference in a bankruptcy case. Norwest Bank Minn., N.A. v. Andrews, 262 B.R. 299 (Bankr. M.D. Pa. 2001); Rambo v. Chase Manhattan Mortg. Corp., 297 B.R. 418 (Bankr. E.D. Pa. 2003); Villarreal v. Showalter, 413 B.R. 633 (Bankr. S.D. Tex. 2009) (Isgur); Whittle Dev., Inc. v. Branch Banking Trust Co., 463 B.R. 796 (Bankr. N.D. Tex. 2011) (Hale); Nguyen v. Wells Fargo Home Mortg., 2013 Bankr. LEXIS 1605 (Bankr. S.D. Tex. 2013) (Isgur); Berley Assocs. v. Eckert, 2013 Bankr. LEXIS 2025 (Bankr. N.J. 2013) (Kaplan). The view that a prepetition foreclosure sale can be voided as a preference has also been adopted by at least one of the five bankruptcy judges in the Houston Division of the Southern District of Texas.

  1. Requirements for Establishing an Avoidable Preference

A homeowner must establish the following elements of proof to reverse a foreclosure sale as a preference.

(a) Transfer of property

The first element of proof needed to establish a voidable preference is that a “transfer” of the homeowner’s property took place. In the Fifth Circuit (which includes all Houston bankruptcy courts), a non-judicial foreclosure sale constitutes a “transfer” of a homeowner’s interest in the property. Durrett v. Washington National Insurance Co., 621 F.2d 201 (5th Cir. 1980). Therefore, the issuance of a deed to the buyer at a foreclosure sale will automatically satisfy the first element of a preference – that a “transfer” took place.

Some early bankruptcy court opinions outside of the Fifth Circuit held that a foreclosure sale was not a transfer of a property interest of a homeowner. One such case was Madrid, 725 F.2d 1197 (9th Cir. 1984), where the court ruled that there was no transfer at the time of the foreclosure sale and that the only relevant transfer occurred when the creditor recorded the mortgage in the real property records (normally a few days after the homeowner originally buys the property). The Madrid opinion agreed with other preference cases which found that the enforcement of a mortgage within 90 days before a bankruptcy filing could not be struck down as a preference where the mortgage lien was recorded outside the 90 day look back period.

However, the bankruptcy code definition of the word “transfer” was amended in 1984 to define the “foreclosure of the debtor’s equity of redemption” as a transfer. Since this amendment, there has been no doubt in any bankruptcy court that a foreclosure sale constitutes a “transfer” of a homeowner’s property and will be considered a preference if the other legal elements of a preference are satisfied. Ehring, 900 F.2d 184 (9th Cir. 1990).

(b) Existing creditor

The second element of proof needed to establish a preference is that the property was transferred to an existing creditor of the property owner. In other words, the buyer at the foreclosure sale must be a creditor of the homeowner on the date the bankruptcy case is filed.

As a practical matter, this requirement limits the ability to avoid a foreclose sale as a preference to cases where the mortgage lender is the successful bidder at the sale. A foreclosure sale that results in the property being sold to a third party can not be reversed in bankruptcy as a preference because the third party is almost never a pre-existing creditor of the homeowner.

It is very common for the foreclosing lender to make a credit bid for some or all of the debt owed to it. The requirement that the foreclosure sale result in a transfer of the property back to the lender will be met in the overwhelming majority of Texas foreclosure sales. At least 90 percent of all houses sold at a Texas foreclosure sale are deeded back to the lender that conducted the sale rather than being sold to a third party.

(c) Antecedent debt

The third requirement to establish an unlawful preference is that the foreclosure sale must be motivated by an attempt to collect an “antecedent debt.” An antecedent debt is a debt owed by the property owner to the foreclosing creditor before the foreclosure sale was held.

This requirement will be automatically met in almost all residential home foreclosure sales. In most foreclosure situations, the home serves as collateral to secure repayment of a loan obtained to buy the house. A homeowner’s failure to pay the loan is the normal motive for a lender to foreclose. The antecedent debt requirement will almost always be met if a homeowner’s failure to pay a mortgage loan is the reason for the lender’s attempt to foreclose.

Although not common, a lender or other creditor can attempt to foreclose due to non-monetary defaults such as: (i) a failure to maintain insurance, (ii) a failure to pay property taxes, or (iii) deed restriction violations. Almost all mortgage loan documents require the property owner to pay taxes and keep the property insured and permit the lender to foreclose if the homeowner defaults on these non-monetary obligations. A foreclosure sale conducted due to these types of defaults cannot be reversed as a preference because the foreclosure sale was not based on a failure to pay an antecedent debt.

Example #1: Homeowner obtains a $100,000 mortgage loan to purchase a house which he uses as a personal residence. Payments of principal and interest are $800 per month. There is no escrow account to collect a monthly reserve for the insurance or property taxes. The loan documents contain a standard clause requiring Homeowner to pay property taxes when due and keep the house insured.

Homeowner fails to buy insurance or pay property taxes. Lender posts the house for a foreclosure sale solely because of Homeowner’s failure to pay taxes or obtain insurance. Homeowner was current on all mortgage payments on the foreclosure sale date. Lender buys the house at the sale.

Homeowner files for bankruptcy and attempts to void the foreclosure sale as a preference. Homeowner will lose because the foreclosure sale was motivated by Homeowner’s non-monetary default of failing to obtain insurance or pay taxes, not as a result of a failure to pay an antecedent debt.

(d) Insolvency

The fourth requirement to establish a voidable preference is that the homeowner was insolvent when the foreclosure sale was conducted. The test for insolvency is a balance sheet test – whether the homeowner’s debts exceeded the value of his non-exempt property on the foreclosure sale date. The property owner is presumed to be insolvent at all times within the 90 days before the bankruptcy is filed. The lender or other creditor will have the burden to prove that the homeowner is not insolvent.

The insolvency test will be easily satisfied in most situations unless the homeowner owns a business or other valuable non-exempt (legally sizable) assets. The bankruptcy code definition of insolvency specifically excludes all exempt assets (assets legally protected from seizure). However, the law does not exclude loans collateralized by exempt assets in calculating whether debts are greater than the value of the homeowner’s assets. It is very unusual for a property owner to have non-exempt assets that exceed the amount of his debts when the debts include loans collateralized by exempt assets such as houses and cars.

Example #2: Homeowner has the following debts and property on the date Lender forecloses on his house for failing to pay the mortgage debt:

Description Value Loan Amnt Equity Exempt Counted Amnt
House 200,000 180,000 20,000 yes 0
2 Cars 40,000 35,000 5,000 yes 0
Furniture 15,000 0 15,000 yes 0
Clothes 4,000 0 4,000 yes 0
Jewelry 7,500 0 7,500 yes 0
Stocks 200,000 0 200,000 no 200,000
Total Assets 200,000        
Liabilities Amnt Owed        
Home Mortgage 180,000        
Car Loans 35,000        
Credit Card Debt 5,000        
Medical Bills 5,000        
Total Liabilities 225,000        

Result: Homeowner is considered insolvent regardless of the fact that he owns $200,000 of non-exempt stock.

(e) Bankruptcy Must Be Filed within 90 Days After Foreclosure Sale

The fifth requirement to establish an unlawful preference is that the bankruptcy case must be filed within 90 days after foreclosure sale date. A homeowner will not be able to reverse the sale as a preference if he waits to file a bankruptcy case for more than 90 days after the foreclosure sale date.

(f) Property Value Must Exceed Payoff Balance Owed to Foreclosing Creditor

The sixth element of proof required to void a foreclosure sale as a preference is the most important. The homeowner must establish that the sale back to the creditor will enable the foreclosing creditor to receive more value for the house than it would receive if the property was sold by a trustee in a hypothetical Chapter 7 bankruptcy case.

A chapter 7 trustee is permitted to sell property in a relaxed, unforced sale, at fair market value. Therefore, this requirement essentially means that the foreclosure sale can be avoided as a preference if the payoff balance owed to the foreclosing creditor is less than the fair market value of the house on the foreclosure sale date. A foreclosing lender (except for a small private company or an individual) will never bid more at a foreclosure sale than the payoff balance due on the loan. Therefore, put another way, a foreclosure can be reversed as a preference only if the homeowner has some equity in the property – only if the market value of the house is more than the payoff balance due on the first mortgage loan.

(g) Bankruptcy Must Be Filed Before Lender Sells the Property to a Bona Fide Purchaser

This final consideration is whether the property has been sold to a bona fide purchaser. A foreclosure sale can not be voided a as a preference if the foreclosing lender sells the house to a bona fie purchaser after the foreclosure sale but before the bankruptcy case is filed. In this situation, a bona fide purchaser would be a third party, without knowledge that the transfer could be avoided as a preference who pays value for the home. In this context, the payment of “value” means a transfer of valuable property, or the satisfaction of an antecedent debt owed by the third party to the foreclosing creditor.

The preference claim is not completely defeated if the foreclosed property is sold to a bona fide purchaser. The homeowner can still recover damages from the foreclosing creditor measured by the difference between the payoff balance due on the loan owed to the foreclosing creditor and the fair market value of the foreclosed home. However, the original homeowner would not be able to recover the house from the bona fide purchaser (the third party that bought the house from the foreclosing creditor).

  1. Do you qualify for a voided foreclosure claim through bankruptcy?

Evaluate your claim if your real property has been foreclosed upon and you meet the following requirements:

(a) the foreclosing creditor was a mortgage lender, homeowner’s association or state taxing jurisdiction;

(b) less than 90 days have passed since the date of the foreclosure sale; and

(c) you had equity in the property on the foreclose date – the fair market value of the property on the foreclosure sale date was more than the payoff balance due on the loan or other debt owed to the foreclosing creditor.

Originally posted on WeberLaw.com

Now You Can Unlock the Power of Justice and the Rule of Law with FRAUD STOPPERS


Are you tired of being a victim of financial fraud, seeking the justice and legal remedy you deserve? Look no further – FRAUD STOPPERS is here to empower you with the comprehensive tools and support necessary for success. With a wide range of services tailored to your needs, we are your ultimate ally in the fight against fraud.

FRAUD STOPPERS Arsenal of Solutions includes but is not limited to:

  1. Audits & Investigations: Our team of skilled professionals will meticulously analyze your case, leaving no stone unturned in uncovering the truth. We employ cutting-edge techniques and resources to expose the fraud and gather irrefutable evidence. We are the only organization (to our knowledge) that can provide you with a Full Level 4 Bloomberg Securitization Audit and all the loan level data and trust information for all Government Sponsored Loans (GSE’s) and loan placed in private trust (shipped off shores) that do not report to the Securities and Exchange Commission (SEC).
  1. Expert Witness Affidavits & Testimony: Our network of esteemed experts will provide compelling affidavits and testify on your behalf, lending credibility and authority to your case. Their specialized knowledge and experience will strengthen your position in the legal battle.
  1. Turnkey Litigation Packages: We understand that navigating the complex legal landscape can be overwhelming. That's why we offer comprehensive litigation packages, equipped with all the necessary documents and strategies to mount a strong defense against fraudsters.
  1. Professional Paralegal Support: Our dedicated paralegals are committed to assisting you every step of the way. They will guide you through the process, offer invaluable insights, and provide crucial administrative support to ensure your case is well-prepared.
  1. Nationwide Attorney Networks: We have established a vast network of highly skilled attorneys across the country who specialize in fraud cases. Rest assured, you will be connected with a trusted legal expert who is passionate about seeking justice on your behalf.
  1. Legal Education and Training: At FRAUD STOPPERS, we believe that knowledge is power. That's why we provide comprehensive legal education and training resources, empowering you to understand your rights, navigate the legal system, and make informed decisions throughout your case.
  1. Debt Settlement Negotiations: Our experienced negotiators will engage with creditors on your behalf, striving to reach favorable debt settlement agreements. We will advocate for your interests, aiming to alleviate the financial burden caused by fraud.
  1. Private Lending: If you require financial assistance to support your legal battle, our private lending options can provide the necessary funding. Our trusted lending partners offer competitive rates and flexible terms, ensuring you have the resources to fight for justice.


And much more! Save Time, Money, and Increase Your Odds of Success with FRAUD STOPPERS' Proven Products and Programs

If you're serious about getting the legal remedy you deserve, FRAUD STOPPERS has everything you need to succeed while saving time, money, and increasing your odds of success. Our comprehensive range of proven products and programs is designed to streamline the process, maximize efficiency, and deliver results.

Time is of the essence when it comes to combating fraud, and we understand the importance of expediting your case. With our expertise and resources, we can minimize delays and ensure efficient progress. By leveraging our extensive experience in fraud investigations and legal strategies, you can navigate the complexities of the legal system with confidence, saving valuable time in the process.

We also recognize the financial burden that fraud can impose, and we are committed to providing cost-effective solutions. Our competitive rates for services, private lending options, and expert negotiation skills can help you save money while maximizing the value you receive. Rest assured that we strive to optimize your resources, enabling you to fight fraud without breaking the bank.

Partnering with FRAUD STOPPERS significantly increases your odds of success. Our proven track record and extensive network of experienced professionals ensure that you have the best possible resources at your disposal. From expert witness testimonies to strategic litigation packages and effective debt settlement negotiations, our carefully curated products and programs have a track record of achieving favorable outcomes. With FRAUD STOPPERS by your side, you can maximize your chances of holding fraudsters accountable and obtaining the justice you deserve.

By choosing FRAUD STOPPERS, you can save time, save money, and increase your odds of success. Our proven products and programs, combined with our commitment to your cause, empower you to reclaim your future. Take the first step towards justice by completing the form below.

Remember, with FRAUD STOPPERS, you have a trusted partner dedicated to saving you time, money, and increasing your chances of success. Let us fight by your side and help you put an end to fraud once and for all.

Our commitment to your success knows no bounds. We are constantly expanding our services and partnerships to provide you with the most effective tools in the fight against fraud.

Ready to get started?

Simply complete the form below to begin your journey towards justice. Once submitted, check your email inbox or email spam folder for detailed instructions on how to move your file forward.

Remember, you don't have to face fraud alone – FRAUD STOPPERS is here to champion your cause and bring you the justice you deserve.

Join us in the battle against fraud today!

Complete the form below and then after submission, check your email inbox or spam folder for detailed instructions on how to move your file forward to get the legal remedy you seek and deserve.



Fraud Stoppers Logo

THIS SITE IS NOT INTENDED TO BE MISCONSTRUED AS LEGAL ADVICE. FRAUD STOPPERS is a Private Members Association PMA. FRAUD STOPPERS PMA is NOT a law firm, non-profit organization, or government agency.  FRAUD STOPPERS PMA does not operate in the public sector. Although this website is visible to the public  FRAUD STOPPERS PMA does not intend for any information contained in this website to be considered as legal advise.

The information about Foreclosure law and other legal information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.  Information on this website may not constitute the most up-to-date legal or other information.  This website contains links to other third-party websites.  Such links are only for the convenience of the reader, user or browser; FRAUD STOPPERS and its members do not recommend or endorse the contents of the third-party sites.

Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.  No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction.  Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client relationship between the reader, user, or browser and website authors, contributors, contributing law firms, or committee members and their respective employers. This site provides “information” about the law and is only designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice — the application of law to an individual’s specific circumstances.

The views expressed at, or through, this site are those of the individual authors writing in their individual capacities only – not those of their respective employers, FRAUD STOPPERS, or committee/task force as a whole.  All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed.  The content on this posting is provided “as is;” no representations are made that the content is error-free.

For instant access to an affordable local competent attorney click here


Spread the love