BK and lein on property

[newstart18]

My ex-wife filed BK about a month ago, a CA with a judgement against her had garnished her wages and also had (has) a lein against my house. The BK stopped the garnishment, but the lein is obviously still there. The CA got the judgement in 11/01, the debt was 2 credit cards in her name only, we were still married at the time. Our divorce was finalized in March of this year, I kept our house, she quitclaimed it to me so she is no longer on title or living here. My understanding is that the BK will wipe out the debt and the judgement, and then the lein could be removed because the debt that caused it was discharged in BK. Today my ex told me that her atty. told her the BK will not eliminate the lein, I will still have to pay it or settle it to have it removed because she is no longer living here. How can this be? If the debt no longer exists, how can the lein still be in effect? Can anyone who knows for certain how this works help here?

[ghacorp]

Legally what you have here is a Perfected Lien which has been recorded and attached to the asset, your home. While the judgment was voided in the BK, the lien remains attached to the property less any homestead exemption in your state. This is how unsecured debts can become secured debts!

[vonniegirl]

Legally what you have here is a Perfected Lien which has been recorded and attached to the asset, your home. While the judgment was voided in the BK, the lien remains attached to the property less any homestead exemption in your state. This is how unsecured debts can become secured debts!

Hi,

I have a friend in a similar situation. However, the BK was done in '95 and the judgment in '94.

Four of the creditors listed on the BK have liens against her husband's property :shock: I told her that it was a possible violation reporting it to the credit bureaus. It seem she found out about this lien when she tried to do a re-finance for lower interest and payments.

Isn't the purpose of BK is to give you a second chance? How can you possibly do that if you will be hit in the future with a lien?

One more thing, her husband bought the house but when they got a second mortgage, she was placed on the mortgage as a co-owner:( Is there any way to get her off the deed? What can she do about the lien on her husband's home after BK...is this a violation?

Thanks in advance for your reply 8)

[ghacorp]

Bankruptcy will wipe out judgments but will not in most cases nullify liens against real property. Oftentimes lawyers obtain judgments then record liens against real estate to ensure they get paid. A lien however cannot be placed for more than a property is worth and is subject to any homestead exemptions. Liens placed against real property can stay on the property indefinately and even be transferred with the property, thus can be in effect for many years until the home is sold. If it were me, I would give priority to other debts and let the leinholder wait to collect the money which could be for a process of many years! I don't know for sure, but I do not believe reporting the lien to credit bureaus would be a negative. After all, an auto loan or home equity loan would be considered a lien as well.

[LadynRed]

Its my understanding that JUDICIAL liens CAN be avoided and removed following a bankruptcy. Its those mechanic's liens (like a subcontractor) that stick like glue and cannot be removed.

GHA is correct, if the lien impairs the exemption, it can be removed.

Newstart, I grabbed this info off of several sites:

Judgment Liens
Usually a judgment does not, in and of itself, give the judgment creditor a lien. The creditor must usually take the additional step of “perfecting” a lien by filing or recording the judgment with the designated government agency to create a lien on the judgment debtor’s property.
Check the laws of your state to determine how judgment liens are perfected. Get a report of liens on file with the Secretary of State to know which liens are perfected, and the seniority of each lien. Liens filed first have priority.


http://www.neunerandventura.com/Articles/RELiens.htm


AVOIDABLE NON PURCHASE MONEY LIENS AND JUDICIAL LIENS: There is a unique type of security interest which deserves a brief discussion in the Chapter 7 context. It is a non purchase money security interest in household furnishings. Under state law, it is perfectly legal for creditors to take lien rights in certain household furnishings etc, which you already owned, when you obtained the loan from a finance company. However, in a bankruptcy proceeding, these type of liens can usually be voided. Generally, judgment liens (Judicial liens created by the recording of an abstract of judgment with the county recorder) on your residence can also be voided. In other words, the bankruptcy will dissolve the obligation owed, and a lien avoidance motion, will result in a judgment declaring the liens null and void, so that you retain the property without having to pay any part of the debt. Many lawyers who do not specialize in bankruptcy fail to file these motions, so if you have already filed a bankruptcy and ran into trouble, these motions can still be filed until your case is closed.
REOPENING CASES: Even after your case is closed, in many instances, your case can be reopened for the purpose of filing the motion, but the costs are much greater, so the creditor hopes the extra costs will dissuade you from doing so.

http://www.sdb.uscourts.gov/Decisions/1995Decisions/1995%20-11%20Dwyer%20htm.htm


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