Expert: Mark J. Markus- California Bankruptcy Attorney - 12/7/2008

Question
Hi,
I won a judgment against a business and filed a lien on his assets without knowing that the date I filed the lien was after the date he filed a chapter 7 bankruptcy. Now his bankruptcy lawyer asked me to remove the lien and threatened to file a motion against me for $10,000. What should I do ?

Answer
The lien is void, at least in the 9th Circuit.  You need to take steps to remove the lien (although honestly, I'm not sure how you do that).  This is probably specific to your state's laws, so you need to find if they have a "release of lien" form or something similar you can file.  Otherwise, the debtor's attorney will have to file a motion to avoid the lien and you could get hit with the costs, although that's usually only recoverable if what you did was in willful violation of the bankruptcy automatic stay and it doesn't sound like that's what happened here.   What you might need to do is file a stipulation for avoidance of the lien and have the bankruptcy court issue an order that can be recorded if there's no state court form enabling the same thing.