Finance
A Colorado homeowner files for Chapter 7 bankruptcy. Their home mortgage lender may:
AA. Not foreclose on the home during bankruptcy
BB. Seek relief from the automatic stay to proceed with foreclosure if the borrower is in default✓ Correct
CC. Cancel the mortgage immediately
DD. Require the borrower to immediately pay the full loan balance
Explanation
When a borrower files for bankruptcy, an automatic stay prevents most collection actions. However, a mortgage lender can file a motion for relief from the automatic stay, which the bankruptcy court may grant (especially in Chapter 7) if the borrower is in default, allowing the lender to proceed with foreclosure on the property.
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