Is it too late to file for Bankruptcy? I’ve already been sued.
I have to file for Bankruptcy THIS WEEK. I’ve been sued, and the answer date is Monday.
Judgments and judgment liens are creatures of State law, and as such, there is considerable variance around the Country. This may also be an area of law where I think title attorneys are as ignorant as laymen.
Here’s the skinny.
No, it is not too late to file for Bankruptcy.
Calm down. Now, breathe. You have more time than you realize. We can take a little time, get this done right; and still get you the result you want.
Here is why. First of all, pending lawsuits against the Debtor are stopped — dead in their tracks — by a bankruptcy filing. The reason is an order called the Automatic Stay that goes into effect the instant a Bankruptcy case is filed. Second, that date in the Petition and Summons that you were served with? That is the answer date. If you don’t file an Answer, then a default judgment can and will be taken against you — eventually. It probably won’t happen on the first possible day, but it might happen that week. In Oklahoma once a Judgment is taken, it cannot be acted upon (i.e., a wage garnishment issue, etc.) for ten days absent some pretty extraordinary events. So, even if a judgment is taken on Monday, you still have ten days before you need to start looking over your figurative shoulder.
So, what happens if that ten days has passed, and the creditor has recorded its judgment in County records creating a lien on your home? Simple. You will pay me a little bit more money, but not a lot more. Once the Bankruptcy is filed a Motion to Avoid (or remove) the judgment lien from your homestead can be filed. It is a relatively simple procedure, albeit a bit fiddly. A motion (which is just a fancy name for a request ) is filed asking the Court to do this. It must be served on the Creditor. The Creditor is then given time to object (not likely), then in every case I’ve ever had, the Court grants the Motion and enters an Order that removes the Judgment lien from the Debtor’s home — caveat below.
Now, what happens if the Debtor owns real estate that is not his home? At that point the Debtor really, really does need to file for Bankruptcy before the judgment lien is recorded. A Motion to Avoid may only be granted to the extent that the judgment lien is impairing the Debtor’s interest in property that he can claim as exempt. I have never seen a successful claim of exemption in real estate that is not homestead — at least not using Oklahoma’s exemption statutes. Of course, filing for Bankruptcy when you own real estate that isn’t your home opens a whole ‘nother can of worms all by itself, but that is a subject for another day.
Another problem is created if you have recently moved to Oklahoma and are not entitled (according to the 2005 Bankruptcy Reform Act) to use Oklahoma exemptions. If you are using exemptions from another State (or the Federal exemptions) you may have too much equity in your home to be able to avoid the lien. That is something that you will need to discuss in detail with the attorney you hire to represent you in your Bankruptcy filing.
However, even if you own real estate that isn’t your home or you have just moved here and aren’t entitled to use Oklahoma exemptions, that does not mean game over. You do still have options, and with a little bit of flexibility you may still wind up with the result that you want. Those situations, though, get very fact specific very quickly.
Oh, and something that every title attorney should know — but too many of them don’t. A judgment only becomes a lien when it attaches to real estate, and a judgment cannot attach to real estate after the Bankruptcy is filed and discharged. So, if you file for bankruptcy and don’t own any real estate, you can’t avoid the judgment liens — because there aren’t any, but the judgments become toothless when the discharge is entered. So, if you go to buy a house a few years after the Bankruptcy, those old judgments cannot attach to your new house — no matter what the title company may say.
So, if you are going to buy a new house, and the title company is very concerned that something wasn’t done right in your Bankruptcy — call your Bankruptcy attorney sooner rather than later. The Title company is probably wrong, but if they aren’t your Attorney will need a little time to fix it.
Elaine
don’t have a comment but i do have a question. So let me understand…my name was on property with my brother. i quit claimed it to him approximately 2-3 years ago and now that he wants to do something with it, has found that there are 3 judgement liens that belong to me on it. Therefore he can do nothing with the property. And what I’m reading here is that I probably can’t file for bankruptcy on the judgement liens because it has been too long since they were placed and I had no knowledge of their placement. Is this correct?
No, that is not correct. I have no idea what will be the answer for you. You need to contact an attorney licensed in your State.
I am 62 years old. I own my Condo but have not been able to pay my Condo Fees., got a letter from their attorney saying if I did not bring it current $4,000.00 behind I have seven days left to do this. The economy got me I am on complete disability and am on a fixed income. I have a suit against BP for the oil spill I do not know how long that will take I lost my benefits from VA and am appealing it. I do not know what to do? Could Bankruptcy help me with this?
What a Bankruptcy can or can’t do for you will depend on many factors, including how your State treats Condo dues. I encourage you to contact an attorney in your jurisdiction. If you need a referral, there is an attorney finder at http://www.nacba.org. Good luck to you, and I suggest you contact an attorney ASAP. Time is seldom on your side in these things.
Joe,
email me at mydreamhomenow at hotmail dot com.
I had a similar experience and wanted to talk to u and see if you were able to save your home.
Becky
i wana to find out judgment lien at least one year old for arizona .
I have a judgement on me that I didn’t know of. I had a truck 9 years ago gave it back never know I had a judgement on me until like a week ago, due to when I was trying to buy a house. But it’s not coming up on my credit report but it comes up in a title search so I owe 32,000 dollars for a judgement for 9,000 but I was not aware of that until a week ago what can I do
I suggest that you speak with an attorney licensed in your State. You do have options, but what they are will depend on the laws of your home State.
I was wondering if you could point me in the right direction. I filed bankruptcy two and a half years ago in Oklahoma, and I am now attempting to buy a home. At the time of my bankruptcy I had a medical judgment filed against me with garnishment, of which they stopped when I filed bankruptcy. However, the judgment has never been updated with my bankruptcy status, and the mortgage company wants a release of judgment to be filed before they will proceed. I have sent the creditor a letter requesting a release of judgment that states my judgment was satisfied by bankruptcy discharge, but have yet to receive one. What would you recommend I do to resolve this issue? Thanks.
Daniel, obviously, I don’t know anything other than what you have told me, and there could be a number of significant facts that you either don’t know or didn’t know you needed to include. However, I would suggest that you contact your bankruptcy attorney for assistance. This could be something as simple as a title attorney who needs to be pointed at the right statute or it could be something considerably more complex.
Elaine
I have a huge judgement lien that is on my house. I am in escrow. I had previously believed that the Arizona Homestead Declaration would give me an exemption for up to $150,000 in equity on such liens. That exemption is supposed to be automatic in Arizona according to ARS33-1101. Well the title company is telling me I have to “legally assert my rights” by getting an order signed by a Judge. I have only 2 weeks till closing and I am freaking out. I really need this money to support my 3 unsupported children. HELP!
Just in case you need to fill out a homestead declaration form, I found a blank form here http://goo.gl/8PjN8q. This site PDFfiller also has some tutorials on how to fill it out and a few related forms that you might find useful.
Thanks Paul! I find PDFfiller very useful. I just found the form I need. Here is a link to the blank homestead declaration form that I was able to fill out http://goo.gl/cT3r2z.
I too am trying to buy a house but I found that a judgement lien had been filed prior to my bankruptcy. I though that everything was ok until I found out that the creditor filed a renewal of the judgement lien prior to the 5 year expiration. In talking with the creditor’s attorney he tells me that judgement liens don’t go away if renewed properly and that I will be subject to the judgement lien on any property I may own in the future! I thought that bankruptcy took care of these issues. Is that not correct?
Bwebb, you will need to contact your Bankruptcy attorney. Your question is both very fact specific and jurisdiction specific. Even if you do live in Oklahoma, and you didn’t tell me whether you do or not, I would still need to know quite a bit about your Bankruptcy to be able to answer your question.
Elaine
Just wanted to share an update… It looks like I just need a new title agency. The one I have now does not recognize the statute, which is unbelievable to me! So there is another title company in town that recognizes the Homestead Declaration.
They are supposed to automatically remove the lien in escrow unless you go over Arizona’s exemption limit of $150,000… I guess title companies are not always that smart.
I want everyone to know so this doesn’t happen to anyone else!
This is actually very State specific. The Oklahoma process and statutory system is very different.
I am in the state of oklahoma. My husbands business partner went crazy about five years ago and we were without a payck for about 2 years. Almost lost everything including our current home. We went from nearly debt free to owing on 5 credit cards, all with judgements against us. We worked out a payment on one and now one has seized our bank account with a one time bank garnishment. (I have no idea if that means now our 37,000 debt is relieved with this one time garnishment or they will do it again) I have no idea where this leave us and no idea about bankruptcy. My husband now has a good job and income, we are working with our mortgage company to get our house out of foreclosure and waiting to hear back on that. I feel like we are just getting hit left and right and we do not have a light at the end of the tunnel. We wanted to pay our debts so we didnt consider bankruptcy plus my husband said it would be worse to do so. Now I feel we are just getting deeper and deeper instead of getting out of this mess from 5 years ago. Any advice you could give me would be greatly appreciated. I really would like to start seeing a light!
I have responded to this comment from the woman in Tulsa by email. If it doesn’t arrive, please contact my office.
Elaine Dowling
I had a judgment lien that a was satisfied and released with the court clerk in 2006. Now I am trying to refinance and was informed the judgment and lien have not been released or satisfied (recorded) with the county clerk. I notified the attorney and he stated it was not his job. The creditor however hired a different attorney and he recorded a release of transcript with the wrong case number, then recorded a amended release of transcript with the correct case but never stated that it was a correction of case number. So now I have three release of transcripts, one in case file never recorded on 11/06/2006, one on 09/24/13 with wrong case number, and final on 11/04/2013. No satisfaction or acknowledgement that the judgment was paid in full. I have tried to contract attorneys with no success. I have tried to file a motion but keep getting told that a satisfaction was filed in 11/06/2006 but not recorded which was supposed be released by the judgment creditor. I do have my receipts and proof of payments (thank God) as well as partial satisfactions from the attorney receiving the payment. the best part of all this is the case is closed and the court already destroyed the records. Can I file a motion to show that the case was closed based on fraud, SOL is 14 years in nm and now the creditor new attorney recorded the new releases kind of makes my case a little easier. So should I proceed with motion to show case was closed based on fraud, or just file a civil suit.
I became physically and mentally disabled and had no income until I received social security. I had great credit and drained my savings and cashed out my 401K and retirement to keep up on my bills but couldn’t pay any longer so I wrote my credit cards and told them my story. In response they filed liens against me and won because I have mind issues and forgot to go, but its been forever. How can I find out if they still exist and how I can clean up my credit slowly over time
-Leisa
Part of your question is extremely jurisdiction sensitive, and you don’t tell me if you live in Oklahoma or not. The rest of your question requires an answer far too lengthy for a comment box on a blog. I would suggest that you call an attorney in your jurisdiction. I think you will have better options than you expect based on the information you have provided me.
Good luck.
Elaine
I live in California
I know just enough about California’s laws to know that they are very different from Oklahoma. So, you will need to talk to someone in California who knows your local laws and your local judgment lien system.
Elaine
I was sued in 2013 and 10 days before my bankruptcy was filed, the creditor’s attorney filed a property lien on my house. If my bankruptcy was a ch7 and was discharged, can they file a renewal of judgement thus renewing the lien by the 5 years?
That is going to depend on which jurisdiction you live in. What you might consider is reopening your bankruptcy to avoid the judgment lien — assuming that is an option in your jurisdiction.
We were sued by a creditor in 2010 for an unsecured loan over $15,000. They won and placed a lien against our home “Wagoner County”. In 2012 we filed bankruptcy, chapter 7, discharged in our favor 2013. We were unaware there was a lien on our home (the attorneys office didn’t do a lien search but don’t know if that’s standard or not), we found out about the lien while trying to refi the house.
It’s my understanding from the attorney we hired that a lien in Oklahoma expires after 5 years, it’s been almost 6 now. The court clerks office in Wagoner county still show the lien but it has not been renewed or extended, I assumed because the debt was discharged in the bankruptcy.
According to the court clerks office we can add a copy of our bankruptcy papers to the lien filing so if we decided to sell our home when a title and lien search was done they would see the debt was discharged and not charge us for the lien amount.
My questions:
1. Is it necessary to reopen our bankruptcy and have the lien properly removed or can we add a copy of bankruptcy paperwork to the lien at the court house showing the debt was discharged? Thus protecting our proceeds / equity if we sold the home.
2. If we reopen our case to have the lien removed through bankruptcy will the equity we have now in our home be reevaluated possibly causing us to lose our home since we have considerable more equity now than when we filed chapter 7?
I cannot possibly give you this much legal advice in a comment on a blog post. I will say that filing your bk papers to show the debt was discharged will have no effect. The discharge affects your personal liability for the debt. It does not affect a lien attached to property. Equity in a homestead is generally exempt regardless of value in Oklahoma, BUT there are EXCEPTIONS to that rule. Any attorney you hire to reopen your case for you should be able to advise you on that. As to whether or not to reopen, I think I would seek the advice of a title attorney about the continued viability of the judgment lien.
Thank You, I didn’t think adding the BK papers would do anything. Your answer is what I expected. I’ll have to go back to the attorney and have them reopen the case to remove the lien.