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ARTICLE · 05 OCTOBER 2012

Mortgage Foreclosure: Beware The Automatic Stay

Pepper Hamilton LLP
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Under Section 362 of the Bankruptcy Code, filing a bankruptcy case automatically stays a wide variety of actions

United StatesInsolvency/Bankruptcy/Re-Structuring
Vicki Harding
Vicki Harding

Kline v. Deutsche Bank Nat'l Trust Co. (In re Kline), 172 B.R. 98 (B.A.P. 10th Cir. 2012) –

Under Section 362 of the Bankruptcy Code, filing a bankruptcy case automatically stays a wide variety of actions, including commencing or continuing a case against the debtor or collecting prepetition claims from the debtor. In Kline, Deutsche Bank commenced foreclosure of a condominium by filing a complaint on March 9, 2005. It then filed an amended complaint on March 16, 2005. The original complaint was served on March 18, 2005, and the amended complaint was served on March 29, 2005. In the meantime, the owner of the condo (an individual) filed a chapter 13 bankruptcy case on March 21, 2005. The bank was not aware of the bankruptcy filing until it received an e-mail from its servicer on April 11, 2005.

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