BK7 Discharged but creditor still sending letters

[ccsjoe]

I'd like to see them try....even if they could, they'd have to tear it out....from a practicality standpoint, it is unfeasible. They'd have to trash it, not repo it.

[justbroke]

We purchased our central air a year ago from home depot, does this mean they can come and dismantle the a/c? ugh

It depends on underlying State non-bankruptcy law. You should go back and read your cardholder agreement (credit card agreement). When a PMSI (purchase money security interest) item is "permanently" attached to a home, it becomes a "fixture" and may not be subject to the terms of the security interest provided by the credit card. This is State dependent. I know that New York State is very specific about this. It may be similar in other States.

Generally speaking, the Uniform Commercial Code (UCC Article 9) dictates. The UCC gives a priority to the Mortgagee of the property over the creditor with the PMSI lien. In other words, if your home is mortgaged, then your mortgage holder "owns" the fixtures, not Home Depot! However, a lot of this UCC prioritization depends on the language in the security interest for the real property (the "mortgage" itself). If the mortgage doesn't contain the clause making all fixtures part of the home... then the PMSI holder could argue that they have priority (and can exercise their in rem rights).

This could get expensive to even fight, so usually places like Lowes and Home Depot just don't bother with trying to claim a lien on fixtures. (This applies to the "new" kitchen, with the exception of the Refrigerator and perhaps the Stove... depending on whether it is "attached". Please, for the sake of the thread, let's not argue the stove thing. It's been beaten to death in other threads!)

I hope that helps.

[IBroke]

Fallonedward,

Your AC, as previously discussed (I remember this discussion in another thread, although maybe not you), is actually now a fixture, attached to the property and thus part of it. They can not simply come and remove it.

Ah, thanks, I guess that applies to a kitchen (and its appliances) as well.

[justbroke]

Ah, thanks, I guess that applies to a kitchen (and its appliances) as well.

Not all appliances. See my post above.

[ccsjoe]

In addition to jb's post, think about it this way. A fridge is an appliance, yet not a fixture. Fair play there. When Home Depot comes asking about my fridge, washer and dryer...yup, come and git'em if y'all want them that bad!

[tcreegan]

What if you purchased a kitchen with such a card or credit? Does it become part of the Homestead Exemption? Can they tear it out?
....actually now a fixture, attached to the property and thus part of it. They can not simply come and remove it.

Is there a lien against the house that survives the BK? I suspect the answer is yes....

Tom in Colo

[IBroke]

Is there a lien against the house that survives the BK? I suspect the answer is yes....

Tom in Colo

Yep, there is...

[ccsjoe]

Yep, there is...

Then you got no problems with kitchen. Loose appliances is a different issue though.

[IBroke]

Then you got no problems with kitchen. Loose appliances is a different issue though.

Thanks, joe.

Fortunately, the kitchen was financed in my mother's name so it won't be part of my CH7. I was curious about my mother's potential CH13 in the future..

[justbroke]

(This is really getting into advanced aspects of liens and the interaction with Article 9 of the Uniform Commercial Code... but I'll continue.)

If the home has a lien on it -- it's encumbered by a mortgage -- anything "installed" not only becomes a fixture, but the mortgagor (lender) may have priority over any creditor of such "fixtures". So, if you owe $400K on your house and it's only worth $350K... and you put $25K in new cabinets, tile, windows... your mortgage holder (mortgagor) literally has a priority lien against that installed property. The credit card creditor would not be able to take the property because their lien is inferior to the mortgagor's lien.

However, should it be reversed, and you owe $350K on a property worth $400K, with $25K in new fixtures, the credit card creditor would actually be able to take the property.

[outsidetool]

When I filed in late 2008 I had one jewery store account which did their own in-house financing. I originally listed them under "unsecured creditors" with everyone else. Very early on they rumbled about being secured. My atty in fact called and asked me what I thought the value of a few items was, and told me that yes, they "technically" had a legitimate security interest. However, he informed them that they would have to prepare a "properly perfected" claim "with the court," for us to "accept the right of security interest in the property." Well, these big-sounding words scared them from doing anything. I heard nothing else from my atty regarding the matter...I never signed an agreement to pay x-muber of $$ on the items, and I kept them. After discharge they sent me a letter telling me where to drop off my items...all the items ever bought on the account. I called my atty and he said to ignore it...they had failed to assert their security interest in the property during the course of the BK case, and they no longer could ask for the items or payment. I shredded the paper...and for 2 years now I've not heard another word, and the account shows on my credit just like all the other accounts.