Judgement debt discharged in BK...but attorney wants $10,500 to release judgement!

[PHXDWTN]

This is beyond absurd and I cannot believe this is a legal loophole.

My bankruptcy was discharged Jan. 2010 and in that filing was included a judgement for $6000+fees/interest.

I figured the judgement would be taken care of with the BK and the actual debt apparently was, so the judgement has a $0 debt attached to it but it's still "out there" and recorded with the County Recorder.

I called the attorney representing the creditor and they said that yes, the debt is $0 but they require a processing fee equal to the amount of the debt in order to release the judgement/lien!

Has anyone ever heard of this? How is this legal? Anything that can be done?

[keepmine]

Stop talking to there lawyer and get your own lawyer to file a motion to vacate the judgment due to the fact that the underlying debt that created the judgment was discharged.

[PHXDWTN]

Thanks for the reply.

I did contact the attorney that filed the BK and they want $1500 to "reopen the case and seek a court order releasing the lien" as he put it.

I'm wary of that because he is saying "seek"...and I'm taking that as it's not guaranteed. I'd hate to pay $1500 and be in the same situation in 2 months.

The other issue, which is why I even found out about this, is because I'm trying to do a short sale on the house Im in and I have a buyer, the short sale is approved, but now the judgement won't let me proceed and we have to close by April 4th.

My attorney said it will take 60 days through the courts to release the lien, which would put it past the closing date (and the foreclosure date is April 19th).

[PHXDWTN]

Thanks for the wording on what needs to be filed "motion to vacate the judgment".
I was able to do a search online and found a packet that I may be able to use to do it myself and not pay $1500 to the attorney.

Can you or anyone else advise on the wording that needs to be written? What you said sounds pretty good (vacate the judgment due to the fact that the underlying debt that created the judgment was discharged) but is it enough?

The form looks pretty straight forward...address, case number, plaintiff, defendant and "I would like the court to:"

Also, is the plaintiff the original creditor (they were the plaintiff and I was the defendant on the judgement) or am I now the plaintiff because I am filing the motion?

[AngelinaCatHub]

First of all, there is a Judgment and there is a lien. The Judgment was handled in that it is $0. You don't remove filed papers, you file other papers that address the Judgment papers. The lien is a different animal. What did they lien?

Have you heard of pro se? Check the bk Courthouse for their procedures, then search for case history or on PACER attempt to find out about the lien process. It is difficult to get a lien off that is why I am so very much against allowing a Judgment to occur. If you sell the house, the lien must be satisfied. If you let it go back, the bank is stuck with it but I don't think it goes with the house in a repo. It could ride on your name. I'm not sure on this one. 'Hub

[AngelinaCatHub]

Thanks for the wording on what needs to be filed "motion to vacate the judgment".
I was able to do a search online and found a packet that I may be able to use to do it myself and not pay $1500 to the attorney.

Can you or anyone else advise on the wording that needs to be written? What you said sounds pretty good (vacate the judgment due to the fact that the underlying debt that created the judgment was discharged) but is it enough?

The form looks pretty straight forward...address, case number, plaintiff, defendant and "I would like the court to:"

Also, is the plaintiff the original creditor (they were the plaintiff and I was the defendant on the judgement) or am I now the plaintiff because I am filing the motion?

As I said, your Judgment is moot but yes you can vacate it and file that paperwork. It unfortunately will NOT release the lien. 'Hub

[PHXDWTN]

'Hub: I was under the impression that a Judgement and a Lien are one in the same.

Doing a search on on the County Recorder's website, it just shows a "JUDGMENT". I have seen other people's records and it specifically names "LIEN" under the title.

The judgement itself does not state anything about having a lien on the property. I got the two intertwined because the their attorney that I called used the word "lien" but they are really a collection agency and I realize they may just be using that as a scare tactic.
I did ask their attorney what happens if I just let the house go into foreclosure and he said "it will follow you to your next property".

The judgement stems from a credit card debt if that helps with trying to figure this out.

[AngelinaCatHub]

Go here my friend: http://www.bkforum.com/showthread.ph...gment-after-BK

And yes, I am confused as well. I believe you have to file a lien using a Judgment paper. I am in FL and this could vary from one state to another. MSbklawyer is superb and would not lead you on, but it may be different in MS. 'Hub

[BKParalegal]

The procedure in BK is called Motion to avoid judgment lien under 522f. I am amazed that BK attorneys do not due this on every judgment while the client is in BK. Typically it is filed 30 days after the 341 meeting. If no objections after 20 days then an order voiding the lien is sent to the judge to sign. You then take the signed order and record it in the county where the judgment lien was filed and then it is done. A judgment has to be recorded every 10 years to stay active so it will eventually fall off on it's own but that is a long time. Since your BK has been closed, you will need to file a motion to reopen and that will take 30 days and then file the motion to void lien and that is where your Atty gets the 60 days.

The question i have is did you reaffirm your mortgage? If not why are you exposing yourself to a short sale. If you did not reaffirm walk the heck away, they cannot report anything on your credit report.

Good luck

[despritfreya]

PHX,

You need to take a deep breath and relax.

1. You are in Arizona.
2. The recording of the judgment in Arizona IS NOT a lien against your personal property. It is a lien against real property, however it DOES NOT attach to your homestead residence unless you have more than $150k of equity - no one in AZ has that kind of equity, and, if you did, the Bk Trustee would have taken the home.
3. The Judgment Lien will expire by operation of law 5 years from its recording date. It cannot be renewed.

Why are you so worried about the recorded lien? Why are you trying to have it removed? Is it just because you think it is a bad thing?

Des.

[BKParalegal]

Why are you so worried about the recorded lien? Why are you trying to have it removed? Is it just because you think it is a bad thing?

Des.

Go back and read the part where she is Up for foreclosure on April 19th and she is trying to short sale. That is why. The most important question is if she reaffirmed the debt in the BK

[despritfreya]

Go back and read the part where she is Up for foreclosure on April 19th and she is trying to short sale. That is why. The most important question is if she reaffirmed the debt in the BK

Does not answer my question since the lien has no impact on a homestead residence in Arizona. As to reaffirming, she would not have done so in Arizona. Any attorney who allows their client to reaffirm in Arizona, IMHO, has committed malpractice.

Two points:

1. IMHO, there is no logical reason to do a short sale if you have discharged the debt in a bk. A complete waste of time and energy unless you are going to "rent" it back from the buyer.

2. If OP is set on wasting time and energy in a short sale, all she needs to do is use First American Title to close the deal. This title company will not require her to go through unnecessary, stupid and illogical hoops to remove a judgment lien that simply does not attach (assuming this was her homestead residence). If this was not her homestead residence she has no legal basis to remove the lien as such a lien survives a bk and is not subject to a 522f motion.

I will presume her Arizona attorney has advised her of both of the above points. If he/she did not then he/she has not given correct legal advice.

Des.

[PHXDWTN]

To clarify some of the questions...

My name is on the title however the mortgage is not, it is on my mother's name (her name is on the title as well). It is my primary residence.

The reason for the short sale vs foreclosure is to try and save her credit as best as possible.

I am trying to get it removed because the title company said the house cannot be sold unless it's resolved.

I'm still confused on the judgment vs lien. The Recorders Office shows it's a Judgment, not a lien.

[shark66]

The reason for the short sale vs foreclosure is to try and save her credit as best as possible.

The hit that her credit will take will be the same. I wouldn't bother with a short sale.

Good luck.

[IBroke]

despritfreya,

Ha, you're exactly what (who) I would need know - your knowledge, to be exact. Would you mind checking this thread? I'm facing a "vacating"-issue, too..

http://www.bkforum.com/showthread.php?67810-Vacating-Judgment-after-BK