Need Help! Is a UCC financial statement a lien in itself? Is this a secured loan?

[phoenixrisin]

I need some help.

We got a home improvement loan back in 2006. The contractor filed a UCC Financing Statement. Is is still active and on file. We didn't know this until recently.

We thought the loan was unsecured. We stopped making payments just prior to BK, and listed them as an unsecured creditor.

Rights to the UCC were transferred to a financing company by the contractor. But the problem I have is on the contract. There is language on the contract that mentions security interest, but- the box that says they can file a lien against our property is not checked, nor is it initialled by us. Keep in mind this is for an addition on our home. The secured property is the roof.

I spoke with my Ch7 lawyer and he led me to believe that if they had not filed a lien on the house prior to our filing BK, then they wouldn't be able to come after us if we don't reaffirm or pay.

He says even if we do start paying on it or work out something we still don't have to sign the reaffirmation agreement. I am having a hard time understanding all this as the info I can find online says that a UCC filing IS a lien in itself.

So:
Is it a secured loan?

Should we just not sign a reaffirmation, and not pay them, and see if they sue us after BK?

Do they need to file something to get a lien on the house, or do they technically already have one?

Our house was included on the BK. We are attempting loan modification, but may or may not reaffirm the house. We may ride-though, or leave. How does this affect this supposedly secured creditor?

[OhioFiler]

The debt will be discharged in your bk. Check with your local recorder's office to see if there is a lien on the property.

[phoenixrisin]

I found out I have no liens on the house that I didn't already know about, and none from that creditor.

(I did find 2 liens I knew about, but are going to be removed by my lawyer because they were my sole debts, and the lien was placed on my jointly owned house.)

So- if the creditor didn't get a judgement and a lien, how can they expect to collect from us other than the reaffirmation?

[OhioFiler]

I found out I have no liens on the house that I didn't already know about, and none from that creditor.

(I did find 2 liens I knew about, but are going to be removed by my lawyer because they were my sole debts, and the lien was placed on my jointly owned house.)

So- if the creditor didn't get a judgement and a lien, how can they expect to collect from us other than the reaffirmation?

The debt will be discharged. They can't collect unless you choose to pay them.

[music12]

there is an important but subtle distinction between a lien and a perfected lien. if the box in your contract were marked, that would have created a lien, but it would not have been perfected unless it was actually filed with the registry of deeds (or whatever they call it). a lien that's not perfected prior to filing bk cannot be perfected afterwards. so the only debts that are really secured for bk are those with a perfected lien.

when you say they filed a financial statement, where is it that they filed it?

[phoenixrisin]

there is an important but subtle distinction between a lien and a perfected lien. if the box in your contract were marked, that would have created a lien, but it would not have been perfected unless it was actually filed with the registry of deeds (or whatever they call it). a lien that's not perfected prior to filing bk cannot be perfected afterwards. so the only debts that are really secured for bk are those with a perfected lien.

when you say they filed a financial statement, where is it that they filed it?

I am in MD, BTW.

The liens and UCC Financiing Statements are filed with the Clerk of the Court for Baltimore County.

The contractor who did the work filed the UCC Financing Statement to provide a security interest for himself and he later assigned those rights to the creditor.

The creditor got a judgement against us in 8/08. We made payment arrangements and they deleted/got striken/ and vacated the judgement in 9/08. In 4/09 the creditor asked for the judgement to be reset because we stopped paying. By 5/09 again a settlement was reached and noted by the court. On 5/19/09 court got notice of our BK.

So- technically the UCC statement WAS perfected because it was filed properly and accepted by the court. This I guess means the loan is a secured loan. But no lien was filed.

[music12]

sounds a little complicated, but since they eventually didn't file a lien on the roof, i think the lien was not perfected.

i think it's not enough that a court accepts that statement. for example, if a creditor gets a judgment in court, that gives the creditor the right to file for a lien, but in many states unless the creditor actually does that, the lien is not perfected.

[phoenixrisin]

sounds a little complicated, but since they eventually didn't file a lien on the roof, i think the lien was not perfected.

i think it's not enough that a court accepts that statement. for example, if a creditor gets a judgment in court, that gives the creditor the right to file for a lien, but in many states unless the creditor actually does that, the lien is not perfected.

I agree. So even though they have a perfected security intrest on file (meaning they have the right to file a lien), they never filed for a lien pre-BK.

So post-BK, after we are discharged and closed, they won't be able to get a lien because liens can't be perfected after BK.

I wonder if they can then try and sue?

[OhioFiler]

[QUOTE=phoenixrisin;305957]I agree. So even though they have a perfected security intrest on file (meaning they have the right to file a lien), they never filed for a lien pre-BK.

So post-BK, after we are discharged and closed, they won't be able to get a lien because liens can't be perfected after BK.

I wonder if they can then try and sue?[/QUOTE]

Nope. Your debt to them is discharged. Nothing they can do about it.