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Bankruptcy Filed During Redemption

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Bankruptcy Filed During Redemption

Reusable edge-case explainer. Legal information, not legal advice. Last verified: 2026-06-02.

What this edge case is

A foreclosure or tax sale has already happened, and a statutory redemption period is running — the former owner still has a fixed window of days, months, or (in some states) a year to pay the redemption amount and reclaim the property. Before that window closes, the owner files bankruptcy. The question is what the petition does to the redemption clock.

The intuitive answer — “the bankruptcy-automatic-stay freezes everything, so the redemption deadline is paused for the life of the case” — is wrong in most courts. The provision that actually governs is 11 U.S.C. § 108(b), an “extension of time” statute that gives the debtor or trustee, at most, the later of the state-law deadline or 60 days after the order for relief. The general automatic stay of § 362(a) does not independently toll a redemption period in the majority of circuits. A separate, narrower question — whether a Chapter 13 debtor can still cure a mortgage default and reinstate the loan — is governed by § 1322(c)(1) and turns on whether the foreclosure sale has already occurred.

This page covers the redemption-tolling mechanics, the cure cutoff, and the court split on whether § 362 can ever override § 108(b). For the broader stay analysis (sales conducted in violation of the stay, void vs. voidable, § 362(k) damages), see bankruptcy-automatic-stay.

When it arises (tax and mortgage foreclosure contexts)

Post-sale statutory redemption (mortgage foreclosure). In states with a post-sale redemption period — e.g., michigan, minnesota, alabama, iowa — the sheriff’s or trustee’s sale transfers a defeasible interest and the mortgagor has a statutory window to redeem. A bankruptcy filed inside that window squarely raises the § 108(b) question. This is the classic fact pattern of Johnson v. First National Bank of Montevideo (Minnesota one-year redemption) and In re Glenn (Ohio/Michigan).

Tax-sale / tax-certificate redemption. Most tax states give the delinquent owner a redemption period after a tax-lien sale or tax deed (e.g., florida, arizona, illinois, texas’s post-deed redemption). A petition filed while the tax-redemption clock runs gets the same § 108(b) treatment: a limited 60-day add-on, not an indefinite freeze. Where the redemption period expires during the case and the only remaining act is issuing the tax deed, courts have treated that issuance as a ministerial act not barred by the stay (In re Rugroden, below).

Strict foreclosure (no sale, equity of redemption). In vermont and connecticut, foreclosure is by strict foreclosure: the court sets a law day / redemption period and title vests in the lender if the owner does not redeem, with no sale. In re Canney applied § 108(b) — not the stay — to this equity-of- redemption period.

Chapter 13 cure-and-reinstate (mortgage only). Distinct from redemption: a Chapter 13 debtor may try to cure the arrearage and reinstate the mortgage over the plan. Whether that is still possible depends on whether the property has been “sold at a foreclosure sale” under § 1322(c)(1), a separate cutoff from redemption.

§ 108(b) — the controlling extension, not a toll

Where nonbankruptcy law fixes a period within which the debtor may, among other things, “cure a default, or perform any other similar act,” and that period had not expired before the petition date, “the trustee may only file, cure, or perform, as the case may be, before the later of — (1) the end of such period … or (2) 60 days after the order for relief.” 11 U.S.C. § 108(b). Source: 11 U.S.C. § 108(b) (LII, retrieved 2026-06-02).

Redemption is the paradigmatic “other similar act.” So if the state redemption deadline falls more than 60 days after the order for relief, the debtor keeps the state deadline; if it falls sooner (the usual case for a late-filed petition), the debtor gets a 60-day extension and no more. In a voluntary Chapter 7, 11, or 13 case the “order for relief” is the filing of the petition itself (11 U.S.C. § 301; retrieved 2026-06-02 — see needs_verification), so the 60 days typically run from the petition date.

Trap. Section 108(b) is an extension, not a tolling provision. It does not stop the clock for the life of the case; it sets a hard outer deadline. A debtor who assumes the automatic stay “paused” redemption until plan confirmation can lose the property when the 60th day passes — exactly what happened in Johnson and Glenn. Commentators flag this as the § 108 “trap.” Source: ABI, “Section 108: Toll or Trap” (secondary; retrieved 2026-06-02).

The majority rule — § 108(b) controls; the stay does not toll redemption

The Eighth Circuit held in Johnson v. First National Bank of Montevideo, Minn., 719 F.2d 270 (8th Cir. 1983), that “the bankruptcy court lacked authority under either Sec. 105(a) or Sec. 362(a)[] to stay indefinitely the expiration of the statutory period of redemption,” and that “the only extension of time available to the debtors was that provided by the express terms of Sec. 108(b).” On the facts, a petition filed three weeks before a one-year Minnesota redemption period expired bought the debtors only 60 days; when that lapsed, title vested in the bank. Source: Johnson v. First National Bank of Montevideo, 719 F.2d 270 (8th Cir. 1983) (OpenJurist, retrieved 2026-06-02).

The Sixth Circuit reached the same result in In re Glenn, 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849 (1985): § 108(b) “expressly grants an automatic extension of the statutory redemption period and sections 362 and 105(a) do not apply.” The same opinion drew a bright line for the cure right, holding that a Chapter 13 debtor’s right to cure a home-mortgage default terminates at the foreclosure sale, expressly rejecting the date the redemption period expires as the cutoff. Source (holding language quoted): Gensburg Calandriello & Kanter, “Conflict as to Whether the Automatic Stay Tolls Statutory Redemption Periods” (secondary survey quoting Glenn at 1440; retrieved 2026-06-02). Direct case-text URL needs_verification (legal hosts returned 403 during this pass).

The Second Circuit aligned with the majority in In re Canney, 284 F.3d 362 (2d Cir. 2002), holding that where a debtor has a statutory time to redeem, “the debtor’s rights to the property are controlled by § 108(b),” which extends the redemption period a maximum of 60 days, and that the stay does not toll the equity of redemption in a vermont strict foreclosure. Source: secondary summaries retrieved 2026-06-02 (Leagle docket entry; FindLaw docket entry). Direct case-text retrieval needs_verification (hosts returned 403/blocked during this pass).

Numerous courts of appeals and bankruptcy courts follow this line, including the Third Circuit (Counties Contracting & Constr. Co. v. Constitution Life Ins. Co., 855 F.2d 1054 (3d Cir. 1988)) and a long list of Eighth-Circuit and bankruptcy- court decisions. Source (case list): GCK Legal survey (secondary; retrieved 2026-06-02). The individual appellate citations beyond Johnson are summarized from that survey and carry needs_verification until each opinion is pulled.

The minority / contrary view — § 362 can swallow § 108(b)

A smaller body of (mostly older, mostly bankruptcy-court) authority held that the “all-encompassing” § 362(a) stay reaches the redemption period and tolls it beyond the 60-day § 108(b) window, reasoning that letting the deadline run is an “act … to exercise control over property of the estate.” Representative decisions: In re Johnson, 8 B.R. 371 (Bankr. D. Minn. 1981); In re Dohm, 14 B.R. 701 (Bankr. N.D. Ill. 1981); In re Sapphire Investments, 19 B.R. 492 (Bankr. D. Ariz. 1982). A related strand (In re Psychiatric Hospitals of Hernando, Inc., 243 B.R. 524 (Bankr. M.D. Fla. 1999)) treats § 108(b) as a statute of limitations for filing actions that “does not extend the time that a debtor has to redeem a mortgage once property is sold at a foreclosure sale” — i.e., even less protection. Source: GCK Legal survey (secondary; retrieved 2026-06-02). Individual B.R. citations needs_verification.

Practical bottom line: the dominant and safer assumption is that redemption is extended only to the § 108(b) deadline. A debtor relying on § 362 to toll redemption is betting on a minority position that most circuits have rejected.

Tax-deed issuance as a ministerial act

Where the redemption period expires during the bankruptcy (because § 108(b)‘s 60 days ran out), at least one court has held that the subsequent issuance of the tax deed is a ministerial act that does not violate the stay — the substantive loss of the redemption right occurred by operation of § 108(b), not by a creditor “act.” In re Rugroden, 481 B.R. 69 (Bankr. N.D. Cal. 2012). Source: Bankruptcy-RealEstate-Insights, “Automatic Stay: Rolling the Dice With a Tax Deed” (secondary; retrieved 2026-06-02). Direct opinion text needs_verification.

§ 1322(c)(1) — the Chapter 13 cure cutoff (a separate clock)

For a Chapter 13 debtor trying to cure and reinstate a mortgage on a principal residence (as opposed to redeem), “a default … on the debtor’s principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.” 11 U.S.C. § 1322(c)(1). Source: 11 U.S.C. § 1322(c)(1) (LII, retrieved 2026-06-02).

Most courts read this as a “gavel rule”: the cure right ends when the foreclosure sale is conducted under state law — not when a later redemption period or recording finishes. So a debtor who files after the sale but during a redemption period generally cannot reinstate the mortgage under § 1322(c)(1); at most they can redeem under § 108(b). In re Glenn (above) is the leading statement of the gavel cutoff. (Circuits divide on what “sold” means in multi-step nonjudicial sales — bid acceptance vs. recording — but that nuance is beyond this page.)

A related provision, § 1322(c)(2), allows modification of a claim whose last scheduled payment comes due before the final plan payment. Source: 11 U.S.C. § 1322(c)(2) (LII, retrieved 2026-06-02).

State-by-state variation

The federal extension applies uniformly, but its bite depends entirely on the length and structure of each jurisdiction’s redemption period and on the circuit the property sits in. Per-state redemption rules carry their own primary citations on the linked jurisdiction pages.

Jurisdiction / circuitHow bankruptcy-during-redemption plays outAuthority
Federal (all)Redemption extended to the later of the state deadline or 60 days after the order for relief; the stay does not independently toll11 U.S.C. § 108(b)
8th Cir. (minnesota, iowa, missouri, north-dakota, south-dakota, nebraska, arkansas)§ 108(b) controls; neither § 105(a) nor § 362(a) tolls a statutory redemption periodJohnson v. First Nat’l Bank, 719 F.2d 270 (8th Cir. 1983)
6th Cir. (michigan, ohio, kentucky, tennessee)§ 108(b) gives an automatic 60-day extension; § 362/§ 105 do not apply; Chapter 13 cure right ends at the foreclosure saleIn re Glenn, 760 F.2d 1428 (6th Cir. 1985) — needs_verification (direct text)
2d Cir. (vermont, connecticut, new-york)§ 108(b) controls even in strict foreclosure; equity of redemption extended max 60 days; recording the certificate of non-redemption not stayedIn re Canney, 284 F.3d 362 (2d Cir. 2002) — needs_verification (direct text)
3d Cir. (pennsylvania, new-jersey, delaware)§ 108(b) controls over general § 362 stayCounties Contracting v. Constitution Life, 855 F.2d 1054 (3d Cir. 1988) — needs_verification
Tax-deed states (florida, arizona, illinois, texas post-deed)Tax-redemption clock gets the same 60-day cap; issuing the deed after expiration may be a non-stayed ministerial actIn re Rugroden, 481 B.R. 69 (Bankr. N.D. Cal. 2012) — needs_verification
Minority-rule outliers (older Bankr. D. Minn./N.D. Ill./D. Ariz.)A few courts held § 362 tolls redemption beyond 60 days — now the disfavored viewGCK Legal survey (secondary)
No-redemption deed states (e.g., much of texas outside the limited tax window, georgia non-judicial)If no redemption right exists at filing, there is nothing for § 108(b) to extend; estate’s interest may be limited to surplus-fundssummarized from linked jurisdiction pages

▸ For Investors / Operators. A running redemption period that you are “waiting out” before your tax-deed or sheriff-sale title becomes marketable is exactly when a debtor-owner files. The good news: in the majority circuits the petition does not indefinitely extend redemption — § 108(b) caps it near 60 days after filing, and where the period then lapses, perfecting your interest (issuing/recording the deed) may be a ministerial act outside the stay (Rugroden). The risk: this is not the same as the void/voidable rule for a sale conducted during the stay — do not bid at, or close, a sale while a petition is pending. Check PACER before and after the redemption deadline.

▸ For Former Owners. Filing bankruptcy during your redemption period buys time, but usually only about 60 days under § 108(b) — not the whole case. If you want to keep the home, file before the foreclosure gavel, where Chapter 13 lets you cure and reinstate under § 1322(c)(1); after the sale you can generally only redeem on the § 108(b) clock. If the property is lost and the sale produced more than the debt, the leftover surplus-funds are yours (and become estate property) — those deadlines and the claim procedure are a separate track.

Operator due diligence

Steps to identify and manage this risk before bidding or before relying on a redemption deadline:

  1. Run a PACER / bankruptcy search on the owner (individual and any record entity) before bidding, and again as the redemption deadline approaches. A petition can be filed the morning of expiration.
  2. Identify which clock is running. Is this a redemption period (governed by § 108(b)) or a cure situation (§ 1322(c)(1))? They have different cutoffs.
  3. Compute the § 108(b) date: the later of the state redemption deadline or 60 days after the order for relief (petition date in a voluntary case). Calendar both dates.
  4. Confirm the circuit’s rule. In 8th/6th/2d/3d Circuits assume § 108(b) controls and the stay does not toll. In any forum, confirm no local decision follows the minority ”§ 362 tolls” view before treating the 60-day date as final.
  5. Do not perform any affirmative act during the stay. Do not hold the sale, accept a bid, record a deed, or send a redemption-expiration notice while a petition is pending unless you have stay relief — that is the separate void/voidable exposure in bankruptcy-automatic-stay. Issuing a deed after redemption has lapsed by operation of § 108(b) is the narrow ministerial-act lane (Rugroden), and is fact-specific.
  6. If the deadline falls inside the case, consider moving for relief from stay / confirmation that the redemption right has expired, rather than self-helping.
  7. Document the estate’s surplus interest. Post-tyler-v-hennepin-county, retained surplus equity is the debtor’s property and thus estate property; route any surplus-funds claim through the trustee, not around the case.

If it happens

  • Owner / debtor. Treat the redemption deadline as the § 108(b) date (state deadline or petition + 60 days, whichever is later). Do not assume the stay extends it. To keep a home, the cure-and-reinstate route under § 1322(c)(1) requires filing before the foreclosure sale. Missing the § 108(b) date generally extinguishes the redemption right and vests title in the purchaser (Johnson; Glenn; Canney).
  • Purchaser / investor. If the § 108(b) period runs out during the case, the redemption right is gone by operation of statute; perfecting your interest may be ministerial (Rugroden), but get bankruptcy-court comfort before recording in a contested case. If you instead conducted a sale or redemption-expiration act during the stay, you face the void/voidable problem and possible § 362(k) liability — see bankruptcy-automatic-stay.
  • Taxing authority / lender / trustee. Do not let title vest or issue a deed by taking an affirmative act during the stay; rely on § 108(b)‘s automatic lapse or obtain stay relief. Willful stay violations expose you to § 362(k) actual damages, fees, and possible punitives (11 U.S.C. § 362(k); retrieved 2026-06-02).
  • Surplus / recovery agent. Once the owner files, any post-sale surplus-funds are property of the estate; a direct county claim or a prepetition assignment may violate the stay or be avoidable. Route the surplus claim through the bankruptcy case.

bankruptcy-automatic-stay, right-of-redemption, surplus-funds, third-party-recovery-rules, tax-deed, sheriff-sale, treasurer-sale, tyler-v-hennepin-county, michigan, minnesota, vermont, connecticut, florida, arizona, illinois, texas

Sources

Legal information, not legal advice. This page summarizes federal bankruptcy law and case law as of the last_verified date and does not account for every circuit, local rule, or subsequent development. The interaction of the automatic stay, § 108(b), and § 1322(c) with state redemption and cure rights is the subject of an ongoing court split and is highly fact- and jurisdiction-specific. Consult a licensed attorney before acting.

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