DOes unsecured debt become secured

[lriff]

I received a summons answered time allowed,and worked out paments with credit card attorneys,never have i missed a payment,they filed with a court,the court awarded judgment against me,and 24% interest since 2004 on 4500.00,why would they still get a judgement awarded if I was making the aggreed payments?
Alos now is this unsecured debt now a secured debt?
I will need to file chapter 13 as many more I am sure will follow,I am on the deed to our home,with a chapter 13 will I be able to ad this judgement?
Thanks

[keepmine]

They filed the judgment because, if you ever miss a payment, they can begin garnishment bank account levies immediately.
No, this not secured debt. A judgment like this can be included in bk.

[EveryDayAdam]

The only way an unsecured debt can become secured is if you sign loan papers to put your house or car up as collateral to pay these guys off...Generally a BAD idea. The debt is still unsecured, it's just now a lot quicker for them to collect should you miss a payment. They also probably did it in order to increase the amount of your debt: they get a judgement, got the interest, late fees, and attorney's fees added on to it...a $4500 debt is now around $8000 i'm sure.

[treehugger1]

Be careful here. In some cases. when a judgmant is issued and a lien is then posted against a home or auto, the amount owed is "somehow" secured by the lien. I believe different states have different statutes related to this, which is why it is important to work to get any judgment vacated. Others can wiegh in here with their thoughts.

[BKcrazy]

Well, not the same scenario, but I had a judgement against a prior landlord. They defaulted on it, so I put a lien on their property. That judgement is good for 5 years and is renewable here. They can't sell their property until they pay me. They owe me about $600. I doubt I will see the money, but at least I know they are pinned for it.

[EveryDayAdam]

a lien from a judgement is different from a lien on a secured property...

If you file BK, you can avoid the judgement and the lien.

A secured debt is when you are given money and explicitly give an interest in a property to a lender as a condition of receiving that money.

Now, if a creditor gets a lien on your property, you do have to satisfy the lien before you can sell the property. But in the case of a lien on your property you can get the originating judgement vacated and avoided by filing for BK. When you do that, the lien gets avoided and the whole thing goes away.

Granted, they are similar concepts...a debt is attached to a property... but, legally, they are two completely different things.

[BKcrazy]

Well, that judgement allowed me to file a lien on their property.

But, I just read something that said it does become secured once you set the lien. It guarantees it. So, a lien on property could still be considered secured. A mechanic's lien on a car would be the same. Can't sell it until it's paid. But, yes with BK it goes bye-bye. Kind of like telling them to....get in line buddy. (Apparently the HOA here put a lien on my property, I think they did it after I filed, they are bumbling ding dongs in that office).

"To create a judgment lien against real property, the judgment creditor typically obtains an Abstract of Judgment from the court that issued the judgment. The Abstract of judgment lists information about the judgment creditor, the judgment debtor and the amount of the judgment. The judgment creditor then records the Abstract of Judgment with the County Recorder in the county in which the judgment debtor owns real property. Usually the judgment lien is then satisfied from the sale proceeds when the judgment debtor sells the real property. In the meantime, the judgment creditor has a lien against the property (which in effect secures payment of the judgment) and the outstanding balance of the judgment increases due to the addition of statutory interest on the amount of the judgment which remains unsatisfied."

Here's the link. Not arguing, but again, it says it does become secured at that point. So, not really sure why you are saying it would not be secured. The law is used as a legal remedy at that point to secure it with the lien, called a judgement or judicial lien. A non-consensual lien. But, maybe I'm just not fully understanding. Which with all this paperwork the trustee wants right now, my brain is clearly frying

http://bankruptcy-law.freeadvice.com/collections/judgment_lien.htm

[HHM]

Liens/Judgments and secured debt are different things.

Secured debt is where the loan agreement expressly creates a security interest in some item of property.

Judgments simply allow an otherwise unsecured creditor to place a lien on property in order to collect the debt. But judgments do not make an unsecured debt suddenly a secured debt. The underlying debt is "unsecured" but has been memorialized as a judgment in order to allow the creditor legal means to collect the debt against the assets of the debtor.

[BKcrazy]

Some lawyers do consider it to be "secured". But, I'm betting that could also be subject to what jurisdiction you are in as well.

I do see what you are saying.

My HOA is claiming they have a secured lien right now. My attorney flat out told me he doesn't care. And neither should I.

On a funnier note, my mortgage company is currently skating on thin ice.....with contempt of court....I filed on the 2nd. Had to call them on the 19th and tell them I filed (they should have known), was aked why I couldn't pay, nononono, can't ask me a damn thing. Then today I get letter stating I abandoned the property. Um, I'm living here...Attorney is really excited now. (Had to share, cause it's funny)

[treehugger1]

I should rephrase my initial comments and state a judgment sets up a "security" in the sense that one cannot sell the property until the lien is satisfied unless the lien is avoided in BK. In addition, if youa re filing for BK, it is worth the time to see if you can have the original judgment "vacated." I think I have this correct.

[HHM]

HOA dues are unique animals under the law. The law does give HOA's an inherent (albeit unperfected) security interest in the real estate within the HOA. The dues "run with the land" so to speak, not with the person living on it.

Unlike with typical secured debts, HOA's have to take steps to "perfect" their lien. But the lien right is specifically written into most HOA laws and HOA's in many states do not have to go to court to place a lien.

[BKcrazy]

Unique animals with people that really don't have any business running them. At all.

My HOA after two months can place lien on the property or go to small claims court. The lien is fine with me. They can just get in line. I'm sure they done what they need to. I've gotten nothing from them, my attorney got their letter. The manager, he came after the previous one mucked up ALL the records and files, told me the president filed lien. I had to hide my smile. I figured that better than small claims court.

[EveryDayAdam]

Liens/Judgments and secured debt are different things.

Secured debt is where the loan agreement expressly creates a security interest in some item of property.

Judgments simply allow an otherwise unsecured creditor to place a lien on property in order to collect the debt. But judgments do not make an unsecured debt suddenly a secured debt. The underlying debt is "unsecured" but has been memorialized as a judgment in order to allow the creditor legal means to collect the debt against the assets of the debtor.

This is correct...While a judgement with a lien against a property is more "secured" than one without (since it prevents you from selling that property without satisfying the lien), you can still file for BK and get the original underlying debt that supports the lien discharged...once that debt is discharged you can file for an avoidance of the lien, since the debt is no longer owed, and it all goes away.

But in the eyes of the BK court, in terms of which creditors get paid first, or which creditors MUST be paid in a chapter 13, an unsecured creditor who got a lien is no different than an unsecured creditor who didn't. Both of those examples would be classified as "unsecured" debt in the eyes of BK law...You do have to take an additional step in order to get the lien off your property once the debt is discharged, but that's just as simple as filing a motion with the court who placed the lien.