Can I reopen a Ch 7 bankruptcy which was discharged in 2009 to resolve a lien issue in 2015? - Bankruptcy Law Questions and Answers- LawQA.com

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Can I reopen a Ch 7 bankruptcy which was discharged in 2009 to resolve a lien issue in 2015?

I hired an attorney to file a Chapter 7 BK in 2008 and it was discharged in 2009. I understood my second mortgage was to be included but have recently found it was not and a lien is held by a collection company. Do I have any recourse in resolving this matter?


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It is likely that the second was discharged such that you do not have to pay it. However, chapter 7 discharges to not release lien claims against real property. If you have ground to obtain a release the court has discretion to reopen the chapter 7 if you file a motion to reopen.

Answer Applies to: Nevada
Replied: 4/29/2015

Answer By Darren Aronow
The Law Office of Darren Aronow, PC
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The lien is not removed in the chapter 7 bankruptcy so it is still valid. I think you have your facts mistaken. They can not collect on discharged debt or hold you personally liable but the lien does remain attached.

Answer Applies to: New York
Replied: 4/29/2015

Answer By Debby Bowinski

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It sounds as though you are confused as to the difference between the obligation to repay money and the security interest in property that is evidenced by a lien. A bankruptcy does not invalidate a mortgage lien but only affects your personal obligation to pay the amount of the loan. The lender's lien remains in place against the property and they may choose to try to enforce it when and if the property value rises enough for it to be of interest to them. The lien also remains in place until such time as you try to sell, transfer, or refinance.

Answer Applies to: Colorado
Replied: 4/29/2015

Answer By Janet Lawson
Janet A. Lawson Bankruptcy Attorney
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Second mortgages remain liens on real property post bankruptcy. You personally do not have to pay it, but the lien remains. So.... if you want to keep the property you do have to pay it. If you want to walk away, you can without consequence.

Answer Applies to: California
Replied: 4/28/2015

Answer By Dorothy G Bunce
A Fresh Start
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Since I just answered this question from you yesterday on another site, I assume you either didn't like my answer or thought you would find someone to give you the answer you wanted to hear if you kept asking. Bankruptcy does eliminate a lot of debts, but if you keep your house, you keep the debt that comes with it. Only Chapter 13 allows someone to lienstrip a 2nd mortgage, and a Chapter 13 requires you to make payments to your creditors through the supervision of a trustee for between 3 ? 5 years. If you bothered to take a look at Schedule D of your bankruptcy petition, I suspect you will see that your 2nd mortgage was in fact INCLUDED in your bankruptcy. But including a debt is no guarantee that the lien against your property was removed, as you have now been repeatedly told by myself and many others.

Answer Applies to: Nevada
Replied: 4/28/2015

Tokarska Law Center
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IN California: In a chapter 7, the debtor's dischargeable type of debts are discharged. It's important to know what discharge means. Dischargeable type of debt includes things like 2nd mortgage and the first mortgage and the car loans, credit cards etc.. Discharge means that the creditor can never try and go collect that debt from you, meaning that they can't sue you and then go after your assets: wages, bank accounts, real estate property. This is true for all unsecured discharged debt. Now, a secured creditor, that's when you have signed over collateral to protect the note in case you don't pay, they're also not entitled to sue you and go after assets EXCEPT for the asset(s) that secure that note. In chapter 7, while your personal obligation to repay has been discharged, any payments going forward are voluntary and other assets (earnings, property) is protected from the discharged debt, the secured creditor's position has not changed. They cannot sue you to try and collect wages but they CAN take the property that is collateral that you turned over when you signed the note. You cannot remove a consensual lien (one that you agreed to take on in exchange for the loan) on real estate property in a chapter 7. So bottom line, you don't have to pay them, but they don't have to let you keep the house but their only option is to foreclose. Having said that, typically such third party holding companies are open to settlement negotiations and I've seen some good settlement options as little as 10 cents on a dollar. There is a way to remove a lien from a personal residence under a different type of bankruptcy - chapter 13 . C13 is available only to debtors with regular income. The jr lien strip motion can be done when the "residence" is worth less than the balance owed on the first mortgage. Whether this option was available to you at the time you filed your bankruptcy depends the financial situation at the time and even if available whether this would give you the best result depends on what happened and will happen going forward. Hope this helps.

Answer Applies to: California
Replied: 4/27/2015

Answer By Ronald K. Nims

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Either you reaffirmed the second mortgage back in 2009 or you didn't. If you reaffirmed the lien, you can't revisit that decision 6 years later and you're personally liable on the lien. If you didn't reaffirm the debt, then you're not liable on the lien and there is no issue for the bankruptcy court to resolve. The second mortgage lien was always a lien against the house. Chapter 7 bankruptcy does not release liens against property. The owner of the second mortgage always had a valid lien on the property?

Answer Applies to: Ohio
Replied: 4/27/2015

Answer By Marc S. Stern
Marc S. Stern
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In 2009 the law was that you could not strip a consensual lien, and a mortgage is a consensual lien, in a chapter 7. That issue is currently before the U.S. Supreme Court. If it was a judgment lien, stripping, to the extent that it impaired an exemption might be possible. Depending upon how the Supreme Court rules, it may be possible to reopen to void the lien but it will be a case of first impression.

Answer Applies to: Washington
Replied: 4/27/2015

Answer By Patrick Currin

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Although there is currently a federal case challenging whether 2nd mortgages can be discharged in a Chapter 7, that has not been the general rule and your case would almost certainly have not asked for that. If you did not abandon the property concurrently with the BK, the test for personal responsibility would depend on whether the debt was incurred as purchase money or to improve the property. If neither, chances are you are still responsible for this debt.

Answer Applies to: California
Replied: 4/27/2015


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Most likely too much time has passed. You can re-file Chapter 7 next year.

Answer Applies to: California
Replied: 4/27/2015

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