We have been notified that a borrower has allowed flood insurance to lapse. Our "45-Day" letter is ready to be sent out, however, I find out they had also filed for bankruptcy and I shouldn't send the letter. I know we have to force-place, but can we do that without giving them notice?

I am not sure you shouldn't send the letter. I would consult counsel, but bankruptcy doesn't allow a debtor to cancel insurance of real or personal property when it is contractually required. It may be best if the letter is from your attorney to theirs, copied to the Trustee.

If you force place, they may contest that later if no notice was provided.

I agree 100% with Andy, check your state laws, but in Missouri we send it to the Trustee and let them deal with it. We (banks)have some rights with repect to collateral insurance.

It's been a while since I've worked with this, but in the state I am in, when a borrower files bankruptcy you can still contact them about insurance.