Expert: Mark J. Markus- California Bankruptcy Attorney - 1/18/2010

Question
I filed chapter 7 BK and received discharge in 8/07. I received a letter yesterday from a company that financed a new furnace and air conditioner for my home in 2008.(interest free til 09)They stated they had a lien filed and I must surrender their collateral.  Do they have the right to foreclose on my home? The amount owed is 6700. They were listed as a debtor when the papers were filed in 2009.

Answer
If they had a valid lien recorded against your real estate, more than 90 days before your Ch. 7 case was filed, then the lien survived the bankruptcy case (unless you file a motion to avoid the lien).  

It is possible to re-open your case to avoid the lien now, assuming you meet all the statutory requirements pursuant to 11 USC 522(f) (it would require getting a valuation of your property based on its value on the date you filed the bankruptcy case, getting mortgage statements from that time, etc.).  This also depends on the exemptions you had available to you at that time that you listed on your bankruptcy schedules.  In short, you need to consult with a bankruptcy attorney in the location where your case was filed for a more comprehensive analysis.

As far as what they can do if you don't do anything, they are prohibited from taking steps to collect on the debt (such as sending you letters or calling you), but they may foreclose on the house pursuant to the lien (or take any other collateral to which their lien has attached under your state's laws).

Now that I re-read your post, it's not clear whether their lien is against your home, or against the furnace and air-conditioner.  If it's just against the furnace and A/C, then yes you could either surrender those to them, or you can reach some agreement with them for payments (usually the current fair market value of the items).

http://www.bklaw.com/