I filed bankruptcy several years ago. I am now in the process of selling my home, and have a buyer. My Attorney tells me that I have a judgment against me that is a ‘lien’ on the title of the property. I know that that debt was included in the bankruptcy and has been discharged. Why is it still a judgement against the property.
I think you have to understand the fundamental part of discharged debts. Bankruptcy does not ‘eliminate’ the debt, it’s still out there, it has not been paid, or not paid in full, however, what bankruptcy does do is terminate the creditor’s ability to ‘collect’ on the debt. That means that the banks, car companies credit card companies and the like can not- -sue you and secure a judgment – garnish your wages – attach your checking accounts – or repossess any discharged item.
But if you had a judgment against you prior to the filing of the bankruptcy, that actual judgment does not ‘go away’, it just can’t be collected. The judgment itself stays in place for 20 years. That is the ‘lien’ against your property.
Now, when you did your bankruptcy, your bankruptcy Attorney should have secured a ‘Release of Lien’ for the real property. This document, signed by the bankruptcy court judge, is filed in the County Clerk’s Office where your property is located, and releases all of the judgments, allowing the property to be sold. Many times the Attorney will secure this document, then give it to you to record. Check through your paperwork and see if you have it. If you do not find it (you will need the original to be filed) contact the attorney who did your bankruptcy and see if it is in their office file. Or sometimes it has been filed and the title company missed it, so if you or your bankruptcy attorney have a filed copy, get it to your real estate attorney.
If you do not have the release, and your bankruptcy attorney does not have it, or the attorney’s file can not be found, then either your bankruptcy attorney or your real estate attorney needs to check PACER to see if the release was ever issued by the Court. (PACER is the federal recording service, and can be accessed by your bankruptcy attorney or any other attorney who is a registered user). Since your bankruptcy is several years old, a request has to be made to have the Court secure a copy of the Release from their storage system. It will take a while to get that document. If no release was ever requested, a motion will have to be made to the bankruptcy court to secure that release, your bankruptcy attorney should take care of that for you.
The problem of course is that this process holds up the transfer of your property. So do not delay, call and contact people right away to follow up on this. The release in bankruptcy does not eliminate the judgment, so it still may appear on your credit report or reporting documents, but the bankruptcy will appear also, informing the reviewer that the debt is not able to be collected.
As always this is a general answer to a general question. Each legal issue may contain other factors that need to be discussed with your own attorney.
If you have a question for Attorney Kukuvka, please mail them to her at 330 E. Main St., Palmyra, NY 14522 or e-mail to cklaw@verizon.net.
Cynthia M. Kukuvka, Esq