Question:

A person bought a car through a bank and then became bankrupt. He was unable to pay the amount and the bank repossessed the car. The bank sells the car for the amount that was outstanding. Is it permissible to buy such a car? Similar dealings occur in real estate. Will it be permissible to buy such a house?

Answer:

If the government allows and supports such dealings of the bank then ownership will be established by purchasing it. However one should refrain from such transactions.

And Allah Ta’aalaa knows best
(Hazrat Mufti) Ahmed Khanpuri (May Allah preserve him)
The answer is correct. (Hazrat Mufti) Abbas Dawud Bismillah (May Allah preserve him)
Mahmoodul Fataawaa (5/411)