A Chapter 11 bankruptcy case immediately halts a foreclosure sale. On filing, an “automatic stay” immediately takes effect, stopping creditors from collecting their debts from the debtor or from the debtor’s property.
For example, the Doubletree Hotel Tucson at Reid Park recently filed for bankruptcy protection to prevent a foreclosure sale. Similar filings occur every day for both homeowners and businesses.
A creditor is allowed to ask the bankruptcy court to “lift” the automatic stay (for permission to proceed with a foreclosure sale or with other collection efforts). However, the debtor is given an opportunity to show that the property should remain protected.
If you would like to protect your individual or business assets from repossession or foreclosure, you may wish to consult with an Arizona bankruptcy attorney familiar with Chapter 11 bankruptcies. For a free consultation, call (480) 719-1152.