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Bankruptcy Law/Judgement Liens

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Expert: - 1/2/2009


Question
Sorry if you have already seen this question from me.  I'm not sure it got through the first time.

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I recently attempted to refinance my mortgage.  During the title work, it was discovered that there were three judgement liens placed on our property.  Obviously, this caused the refinance to fall through.

My wife and I filed for chapter 13 bankruptcy on 12/14/1999.  It was satisfied and discharged in February, 2004.  

The judgement liens were placed before the bankruptcy filing, two on 8/23/1999, and the third on 10/26/1999.  My bankruptcy attorney included the 10/26 judgement in our filing, but not the other two, but all remain on our
property.

I was told by the mortgage company that the liens will expire after 10 years, but I would like to refinance before rates go up again.

Since these liens were filed before the bankruptcy, can I do anything to get them removed so I can refinance?

Thank you.

Answer
This is a dangerous situation. I am going to assume for the sake of my hypothetical answer that the liens would probably have been avoidable in your bankruptcy, but there is not enough information given in your question to evaluate that.

It is possible that the court would allow you to reopen the case so that you can then seek the avoidance of the liens. It is a two step process. First you have to reopen, then you have to file a motion to avoid the liens. However, so much time has elapsed there is a real danger that the court would deny a motion to reopen. Even if you are allowed to reopen, what if you might then go on to somehow lose the motions for lien avoidance? In that case you would really be screwed, because by then you have made the creditors wake up and realize that they should renew the judgements.

Maybe you will be better off letting things sit tight and just hope the liens expire on their own? Of course, there is still a danger the creditors might renew anyway. I suggest you go back to your attorney or find some other local bankruptcy attorney with genuine expertise in consumer bankruptcy and further evaluate all your options.

You don't say how much the liens are. If they are not too big, you can also consider just paying them if what you stand to gain by a refi at low rates is more valuable than paying the liens, or try to settle them at a discount, offering a reasonable payment and if you can't get them settled then you try the motions to reopen avoid.   

If it was me, I would probably sit tight, and wait it out.

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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