Is This Possible?

[Ann]

All, is it possible to pull money out of our 401k to offer up a settlement right after being discharged from chapter 7? When I about to fill out the form to get the money there was a section about being in bankruptcy. I'm thinking since I'm discharged I'm free and clear to do what I need to do...is this correct? I know it may not be the best idea but to get rid of that lien it sure is for me. Can I legally pull out money now that I'm discharged?

[drowning123]

I don't think anything is wrong with it, since 401K's are untouchable during bankruptcy. Is your case closed or just discharged? I would wait until the case is actually closed.

[tobee43]

ann....what would you be settle at this point?? something your reaffirmed during your 7???

you don't say when you were discharged????

[drowning123]

ann....what would you be settle at this point?? something your reaffirmed during your 7???

you don't say when you were discharged????

She must have reaffirmed her mortgage and she has a judgment lien on her house.

[tobee43]

if she had a judgement lien on her house...it absolutely can and should be removed and cleared with the discharge....if it was listed on the bk??? so i'm thinking 2nd mortgage.....or auto....you think?? we're guessing here! LOL!!!

i know a business loan i had was 50k...i offered them 13k...and they grabbed it!!! but that was BEFORE not after the discharge???

[drowning123]

if she had a judgement lien on her house...it absolutely can and should be removed and cleared with the discharge....if it was listed on the bk??? so i'm thinking 2nd mortgage.....or auto....you think?? we're guessing here! LOL!!!

i know a business loan i had was 50k...i offered them 13k...and they grabbed it!!! but that was BEFORE not after the discharge???

She just needs to file a motion to vacate, right? How about if it's a credit card judgement lien? BK will take care of that, right? LOL!!! She'll come back to all the answers from us. LOL.

[tobee43]

She just needs to file a motion to vacate, right? How about if it's a credit card judgement lien? BK will take care of that, right? LOL!!! She'll come back to all the answers from us. LOL.

normally each judgement or lien will have to have a seperate motion filed and then they are released provided they were listed and discharged on the bk.

this happens after the discharge. i know someone that in fact hired a completely different atty to handle that since he was much less expensive. my friend didn't even have to make any appearance...and she had 4 seperate motions to vacate the liens and or judgements....all were wiped off the face of this earth!

[drowning123]

normally each judgement or lien will have to have a seperate motion filed and then they are released provided they were listed and discharged on the bk.

this happens after the discharge. i know someone that in fact hired a completely different atty to handle that since he was much less expensive. my friend didn't even have to make any appearance...and she had 4 seperate motions to vacate the liens and or judgements....all were wiped off the face of this earth!

Nice! Thanks for the info.

[tay666]

normally each judgement or lien will have to have a seperate motion filed and then they are released provided they were listed and discharged on the bk.

this happens after the discharge. i know someone that in fact hired a completely different atty to handle that since he was much less expensive. my friend didn't even have to make any appearance...and she had 4 seperate motions to vacate the liens and or judgements....all were wiped off the face of this earth!

Our lawyer said the judgement lien on our house had to be stripped during the BK.
Judgements can be vacated after the fact, but any liens that are perfected have to be stripped durning the BK timeframe.

[tobee43]

Our lawyer said the judgement lien on our house had to be stripped during the BK.
Judgements can be vacated after the fact, but any liens that are perfected have to be stripped durning the BK timeframe.

that may depend on the state i guess...since i know someone that had to do it after.

and maybe it also depend on what type of judgement or lien it was.


thankfully we had none at the time of our filing.

[tcreegan]

judgement vs lien

Hi all,

Aren't a judgement and a lien two separate things?
The judgement is a legal decision that you owe money and a lien is a method to collect the money.....?

Tom in Colo

[tobee43]

yes...and no....

"a lien is always against real property, such as a house. this prevents the property from being sold or used as collateral. A judgment can be anything from the liquidation of assets to garnisment of bank accounts and wages."

many people while in bk reaffirm the liens on their homes or cars....


" there is a big difference in bankruptcy. There is even a difference in the type of liens. For example, judgment liens are a lot easier to avoid than administrative liens."

judgment creditors have much less power to affect your plan than lienholders. ....i.e. sear dept store has a lien against your only collateral...i.e. your house....you reaffirm your home, but in bankruptcy list the lien from the judgement from sears on your house. it's a separate situation in MANY states NOT all...from what i read on this board.

i know someone in nj that AFTER the BK ...had to have each and every judgement and or lien individually removed...each usually costs a fixed amount to have removed by the atty.

[tay666]

Hi all,

Aren't a judgement and a lien two separate things?
The judgement is a legal decision that you owe money and a lien is a method to collect the money.....?

Tom in Colo

That is the way I understand it as well.
A judgement is a legal finding that you owe a debt, and that the plaintif has the right to collect that debt by any legal means.

Those means my include wage garnishment, seizing bank accounts, or attaching liens to real property.
They cannot do any of those until they have a judgement first.

A lien is attached to real property.
They cannot take the property, or make you sell it.
But if you do try to sell it, you cannot get clear title, or deed until the lien is satisfied. (which is why they do a title search before processing home loans)

Which is why liens have to be stripped from the property.
And at least in my state, it seams this must be done during the BK process.

Judgements just need to be vacated. Which basically turns them into a non-ruling. Meaning, they no longer exist.
From what I understand (at least in my state) you can use a lawyer to do this, or you can just do it yourself. Find out what forms your court requires, fill them out citing the BK and the fact the debts are no longer collectable.
Usually require some small fee for filing and doing the paperwork.

[Ann]

All, thanks for all the replies! Sorry it has taken me a few days to get back here to read all of them. No judgment here. I was referring to a second mortgage lien. We did not reaffirm the first or the second mortgage. We just want to stay where we are. We are underwater by at least $69,000 or so with the second. We just would like to pull a little money from our 401k and get rid of the lien from the second. Hope I am making sense. We are still not closed and we were discharged a week ago. Not sure if we should notify the bank by phone or mail? Which do you think would be the best way to go about this?

[drowning123]

I see what you're saying. If you plan on staying in the house, and paying off the second mortgage will ease your monthly expenses, why not. Shouldn't be a problem, but I'd wait until the case is closed.