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Can a non-party to the Bankruptcy case dispose of a lender's (debtor) asset in CH 11 without first lifting the Automatic Stay?

Las Vegas, NV |
Filed under: Bankruptcy

Can a non-party to the Bankruptcy case dispose of a lender's (debtor's) asset in BK CH 11 without first lifting the Automatic Stay and before the Hearing for the Sale of the Loan Pools?
The lender (a MERS member Filed Bankruptcy Chapter 11) and then another entity assigned my loan to itself using MERS before the Hearing for the Sale of the Loan Pools took place. The MERS assignment smells fishy to me because:
1. The lender (debtor) rejected all its executory contracts that may include MERS
2. The new beneficiary is not a party to the BK Case
3. The hearing for the sale of the pools of loans hadn't taken place yet and...
4. The lender did not assume MERSCORP in its Assumption Schedule.

Attorney Answers 3


My instincts tell me that your deed of trust is an asset of the estate so you don't have standing to say anything. However, what keeps you from talking to the counsel for the unsecured creditor's committee and seeing what he/she can do for you?

For example, if the deed of trust is worth 90k and someone just stole it from the estate, the unsecured creditors committe counsel will want that 90k!

I don't know how this benefits you except maybe you want to put in an offer for that 90k yourself? Like offer them 60k for that note etc.

Get counsel to do some analysis for you. No one will do it for free.

I still don't know what your goal is though.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: for more information about my services.

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That question is really beyond the scope of this forum. You need a qualified chapter 11 attorney to review the circumstances. Notwithstanding that, your post lacks some details to even figure out the issue, i.e. who are you in this situation and why does it matter? You say "my loan," are you a debtor (mortgage borrower), were you an investor in the pool?

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I'm a borrower and another bank (not my original lender) self-assigned the beneficial rights of my Deed of Trust and Note to itself using one of their own employees as a MERS officer two months after the original lender filed bankruptcy Ch 11.


If I am reading this correctly, I think your bigger issue is: what effect does this have on you as a borrower? The loan is an asset that can be transferred and you're responsible to pay who you understand holds the loan. Or else you risk being foreclosed on. Nevada courts have not been too kind to the "they don't own my note" series of defenses...

Clark County, Nevada practitioner.

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