Expert: Mark J. Markus- California Bankruptcy Attorney - 6/3/2006

Question
Was  the lien filed when I took out the line of credit?   

I got the equity line of credit in 2003,  but I thought a lien was filed if you did not pay the bank.  Is it automatically filed upon initiation of the loan to secure  the money borrowed?






-------------------------

Followup To

Question -
I'm not positive they have a lien on my  home; however,  if one exists it was filed AFTER I filed my BK.  (I was only 30 days late on the payment when I filed).  Also,  what is "senior debt obligations"?
-------------------------

Followup To

Question -
Mr Markus,

I file Chpt 7 Aug. '05.  It was discharged Dec. '05.  I am currently looking at refinancing my home to pay off my car and small loans to people.  I have a home equity line of credit that was charged off Sept. '05.  They have not contacted me about paying back the loan nor have they reported on my credit report.  
Must I pay that equity line off if I refinance my house?

-Thank you for your time,

Terri Mundy (Alabama)

Answer -
If they had a lien against your property prior to your bankruptcy being filed, then yes, you must pay it off, unless you are only refinancing senior debt obligations. This may also depend on Alabama real estate law of which I have no knowledge.

Answer -
I don't understand how they could get a lien after your bankruptcy case was filed and charge off the loan one month after you file, but if those are the facts, then so be it.  If you owed money on the equity line prior to filing your bankruptcy case, and they had not recorded a lien prior to your filing the case, then that debt was discharged in your bankruptcy and you no longer owe the money.  If they recorded a lien after your case was filed, it is void.

A senior lien is one that is recorded prior to a junior lien.

Answer
A lien is filed to create a perfected security interest in the collateral for the loan.  I've never heard of one being filed after the loan is made, but again I have no idea what Alabama law is.  You really need to discuss this with an attorney in your area.