Expert: Mark J. Markus- California Bankruptcy Attorney - 7/31/2009

Question
QUESTION: This pertains to a California CH 13 filing. I have a judgment lien against someone who has filed Ch 13. His payment plan proposes to repay zero cents on the dollar for unsecured debt. What recourse do I have to collect at least partial payment of this debt? I'm attending this person's bankruptcy hearing on Monday, so would like to know what to expect. Many thanks in advance.

ANSWER: Has your lien attached to any assets?  Was it properly perfected under California law?  If so, on what date did the lien attach?  If it was within 90 days prior to the bankruptcy case being filed, then it can be avoided by the debtor.  If not, then you have a security interest up to the value of whatever collateral it has attached to and the debtor must provide for payment to you up to that value.

http://www.bklaw.com/

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QUESTION: The lien is unsecured i.e. not attached to any asset like his house or truck. The judgement lien was filed last September in Superior Court in the County in which he owns property. I have been told by my corp counsel (not a Bankruptcy attorney) that I would be first in line for repayment with other unsecured debtors should there be any extra money. What's the best way to be a squeaky wheel to recover at least partial payment of the $7K this guy owes me.

Answer
Then what you have is an unrecorded judgment, not a lien.  So you have a general unsecured claim like all the other unsecured creditors and would share pro rata with them if there's any payment to them.  You should review the plan and schedules (or have an experienced bankruptcy attorney do it) and see if there's anything inappropriate, and object if appropriate.  Most likely the Trustee will do the same thing.  Unless you can prove that the debtor is hiding income/assets, if his Form 22C and Schedules "I" and "J" are accurate, and all of his plan payments are going to "senior" debts (such as mortgage payments or taxes) then you're likely not going to receive anything.