4 Year Old Bankruptcy Lein Shows Up At Settlement

[jdaddy04]

Pennsylvania -

Filed Chapter 7 four years ago. Dismissed everything as debts were greater than assets including equity in home, etc. Unsecured credit card lender judgment was provided to our attorney and this information was included in the bankruptcy showing credit card company as as a judgment and showing the credit card companies attorney, address, etc.

4 years later we are selling our house and at closing $22k is withheld from the proceeds advising there is a lien against the property for the above cited credit card company. Firm that was handling closing advised that it was a simple matter of certain paperwork not being filed. Subsequent discussions with the original bankruptcy attorney has him avoiding direct questions on likelihood of recovering money. I can not see how this was not addressed in the original bankruptcy as the lenders information was listed, etc. It has been suggested that re-opening the bankruptcy file would be problematic as our income, assetts, etc have changed in the last four years . . . exactly what bankruptcy was meant for . . . a fresh start. If the original attorney comes back and says I am out of luck should I have a second attorney looking at this? I can't imagine, believe that failure of the original attorney to file a piece of paper should cost me $22k.

Thanks

[Ladynred]

If the judgment lien was placed at the time the judgment was rendered, then a motion to avoid that lien should have been made during your bankruptcy - your lawyer should have done that since he knew about the judgment. Checking to see if a lien was perfected against the property isn't that difficult to do.

The bankruptcy automatically makes the judgment null and void, but that's not true of the lien. Your lawyer should have also filed paperwork with the court to vacate the judgment due to the bankruptcy, although he might have charged you more to do that. You can still do it today.

If your original lawyer won't respond, then consulting with a new one may be your only recourse. Re-opening your case to deal with this judgment is what you'll likely have to do, but your current income has nothing to do with dealing with something that should have been done 4 years ago, it's not a new case where your income, assets, etc. are re-evaluated.

[JETX]

Originally Posted by Ladynred

The bankruptcy automatically makes the judgment null and void

With all due respect to Ladynred.... that is NOT true.

If a claim is included in bankruptcy filing and a lawsuit has been filed but no judgment, the defendant (petitioner) or his/her attorney should notify the court of the bankruptcy filing. Once noticed, the court should dismiss the proceeding.

However, if an existing judgment is included in a bankruptcy proceeding and the debt is discharged, the defendant or his/her attorney should file a 'Motion to Vacate' (aka 'Motion to Set Aside') the judgment based on its being discharged by the FEDERAL bankruptcy court. The bankruptcy discharge 'trumps' a judgment.

Your lawyer should have also filed paperwork with the court to vacate the judgment due to the bankruptcy, although he might have charged you more to do that. You can still do it today.

All of that is true... and sort of contradicts your earlier statement.

If your original lawyer won't respond, then consulting with a new one may be your only recourse. Re-opening your case to deal with this judgment is what you'll likely have to do

Sorry, but again... not true or needed.
If the original 'cause of action' (that lead to the judgment) or the judgment itself is listed in the bankruptcy discharge, it is much easier to simply get the judgment dismissed. Once it is dismissed, get the lien dismissed (since it can't 'stand' without the underlying judgment).
As for 'not needed'.... since this was a chapter 7 filing, presumably a 'no asset', the judgment itself should already be subject to dismissal.


, but your current income has nothing to do with dealing with something that should have been done 4 years ago, it's not a new case where your income, assets, etc. are re-evaluated.[/quote]

[Ladynred]

Per BK code:

§ 524. Effect of discharge

(a) A discharge in a case under this title—
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;

Seems to be pretty clear, the judgment is null and void.

[JETX]

Originally Posted by Ladynred

Seems to be pretty clear, the judgment is null and void.

You're almost correct. The judgment CAN be 'null and void'... but the court has to do it.

It simply doesn't just disappear on its own.