Automatic Stay Violated

Automatic Stay Violated

A New York bankruptcy judge on June 5 ruled that a lender, its agent and an official presiding over a foreclosure sale violated the automatic stay in bankruptcy proceeding when they conducted the foreclosure sale after being notified that the homeowner had filed for bankruptcy (In Re: Judith Anne Crawford, No. 07-36853, Chapter 13, S.D. N.Y. Bkcy; 2008 Bankr. LEXIS 1670).


Judith Anne Crawford filed for Chapter 13 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.


Creditor HSBC Bank proceeded with the foreclosure sale of Crawford’s home despite the fact that her husband had faxed a copy of the bankruptcy petition to HSBC and to the referee a day before the sale.


Bankruptcy Judge Cecelia G. Morris issued an order directing HSBC and the referee to show cause as to why they should not be held liable for willfully violating the automatic stay.


Bankruptcy Judge Morris said that based on the record, there was no dispute that the automatic stay was violated.


Moreover, the bankruptcy judge held that because the referee notified HSBC's representative at the foreclosure sale that Crawford had filed for bankruptcy, that notice was imputed to HSBC.


 Bankruptcy Judge Morris ruled that the foreclosure sale was invalid, that $8,553.34 in foreclosure costs were stricken and that punitive damages in the amount $60,000 were to be paid by HSBC.

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