Bankruptcy Law/Statute of Limitations on reopening a Bankruptcy for an avoidance of Lien
We are supposed to close on the sale of our home on Friday 3-8-2013. While researching the title they found we had a lien on our home. We filed for bankruptcy in 2010 and it has been discharged. We had 2 liens on the house at the time, and one was removed, the big one was not. Our attorney is not being very helpful. I want to know if there is a time limit on reopening our bankruptcy to get the avoidance of lien?
There is no precise limit, but read this: "Be careful not to wait too long.� If the creditor holding the lien has taken some action to enforce that lien, then the Bankruptcy Court may choose not to allow the avoidance. �This is the principle called “laches”. �The principle provides�that a party who has “slept on its rights”�is no longer entitled to its original defense as a result of this delay.
As with many concepts in the law, this is not a defined period of time. �So a lien that has existed for 15 years without any form of enforcement might still be avoidable, but a lien that has only been filed for 5 years might be fully enforceable if the creditor had taken aggressive steps to enforce the lien and the Debtor ignored or failed to defend the claim."
Did your attorney know that there were two liens? If he knew that there was a judgment in connection with the remaining lien, he should have investigated. While there are time limits on bringing malpractice actions, the limitation period on such actions generally does not run until the malpractice is discovered. (The rule depends on the law of the state where you live).
So, if your bankruptcy lawyer failed to do his duty then, he should do it now, or you would have to get another lawyer to act. Of course, the malpractice damages would be limited (if you are successful in getting rid of the lien) to the cost of hiring the new attorney. If you are not successful, then the cost would be that required to get rid of the lien.
Do not delay. Contact your bankruptcy lawyer and indicate that he may have committed malpractice. He may still ignore you, but you cannot delay further.