Discharge of liens

[jlmaca]

I am suppose to close on a short sale Friday. My home is underwater $150k. The bank has accepted the deal, I found a buyer for about half of the loan amount. The title attorney just located 2 liens on the property. They were filed by a collections attorney for credit cards. I filed chapter 7 last year and they were listed and discharged. I'm being told that since the liens are filed that they will still remain attached to the title of the home even though I won't be personally responsible. My BK attorney says hogwash, that the liens should have been removed. Which is it?

[DebtEnder]

Unless a motion was filed with the court that vacated the judgement and subsequent liens then they are still valid. Can they be removed, yes I believe so as the debt was only secured as part of the judgement. However this judgement needs to be vacated and the liens avoided.

[jlmaca]

Thanks DebtEnder, this make sense. However, there was no judgement to vacate. They filed the liens when they sued me and we filed for BK before they could get a judgement. Not sure if this makes any difference.

[despritfreya]

1. Get a copy of the judgment liens.

2. If the judgments are dated after your filing date and/or the liens were filed after the date you filed the bk, contact the creditor's attorney and ask that they be removed as the entry of the judgment and/or the filing of the liens were a violation of the automatic stay.

3. If the judgment/liens were filed before your filing date whether or not you have to "avoid" them depends on two things:
a) Will the creditor be a jerk and not voluntarily release the liens to allow the short sale or
b) How your homestead statute is worded. Check with your bk attny. In my State judgment liens do not attach to homestead property unless there is equity in excess of the allowed exemption. As a result one need not file a 522(f) Motion.

If (b) above applies in your State I do have a recommendation as to which Title Company to use - although switching at this late stage may be a problem. My experience is that this one particular Title Company understands bk law and will not make you jump through unnecessary hoops in closing a deal. Since I do not believe it would be appropriate for me to post the name, if you want the name, PM me.

Des.

[tcreegan]

Hi jlmaca,

no judgement = no lien ....at least on credit card debt

If someone who worked on the house/property (remodel, roofing, some form of construction work) and didn't get paid they can get a 'mechanics' lien w/o getting a judgement first. For credit card debt/money debt, the lien is an option a creditor has for collecting on a judgement.

Curious, did you reaffirm the mortgage in your BK?

Tom in Colo

[despritfreya]

no judgement = no lien ....at least on credit card debt

Tom,

If no judgment lien I'm thinking may be some sort of lis pendens? But not sure why there would be one when OP was dealing with credit card debt.

Des.

Des.

[jlmaca]

Tom, thanks for the reply, I did not reaffirm. I believe what's happening is the creditor is keeping the lien on the property in hopes of receiving some compensation for getting rid of it. I don't think they realize their is not equity. If this deal falls through because of the lean and it proceeds to a foreclosure sale the new buyer would have to satisfy the lien and they must be hoping for this. Why else would they have not gotten rid of it?

[jlmaca]

Thanks for the info despritfreya. The liens were filed before my filing date. The creditor will be a jerk because I believe they are simply trying to be "paid off". I will check out 3.b) and get back to you. If 3.b) does not apply how do I now proceed to "avoid" them or is that not possible? If this proceeds to foreclosure and sheriffs sale with the liens still attached then would not the new buyer be responsible? If this was the case every credit card company in America would be filing liens on real estate because they new they would eventually be paid.

[despritfreya]

The liens were filed before my filing date. The creditor will be a jerk because I believe they are simply trying to be "paid off". I will check out 3.b) and get back to you. If 3.b) does not apply how do I now proceed to "avoid" them or is that not possible? If this proceeds to foreclosure and sheriffs sale with the liens still attached then would not the new buyer be responsible?

The reality is (and as stated in a prior post from this date), a short sale IMHO (yes Pandora, another "acronym"), is a waste of time. If you cannot simply get the "liens" removed then don't waste any more time, energy or money on the effort to complete the short sale. Let the lender foreclose. You discharged the debt in bk (all debt, including the credit cards) therefore you have nothing to worry about. And, no, the liens junior to the 1st mortgage do not follow to the new owner if the property is foreclosed.

Des.

[tcreegan]

Hi again jlmaca

After your BK cases discharges, go back to the local court where the credit card companies got the judgement and file a motion to vacate/set aside the judgement. And after that, pull your credit reports and clean them up. Clean up all the loose ends....

Tom in Colo