Monthly Archives: July 2014

Can Filing Bankruptcy Save My House From A Lien?

This is part of an AVVO bankruptcy question I just answered.  bankruptHOUSE

Now, if your house looked like the one in this picture,

you probably would not care if you lost it filing bankruptcy.

So, I think the questioner has creditors chasing him.

Which is when folks begin to consider bankruptcy as an option.

How Does A Creditor Get A Lien On My House?

First, is it just your house?  In Michigan, a creditor can only lien an asset that is in the name of the debtor, the one it has a judgment against.  So only your interest can be liened, if the house is in your name and one or more other people, their interest is not affected.

And, creditors cannot just rush around putting liens on houses.

First, they have to have a judgment against you.

So, you have to be sued, served with the summons and complaint, and lose the case, have a court enter a judgment against you, and the appeal time run, before a lien can be placed.

That judgment lien is lower in priority than any mortgages or other liens already recorded.

Unpaid property taxes and water bills become liens on the real estate after a certain amount of time.

So, if the house is sold, liens are paid from proceeds in accordance with which one is first.

Except the government makes its liens first, automatically.

That is why mortgage companies pay property taxes, so the government does not sell the property out from under the mortgage.

How Does Filing Bankruptcy Affect A Lien On My House?

Filing bankruptcy has NO EFFECT on mortgage liens, or other consensual liens.

A consensual lien is one you agreed to, as opposed to a creditor putting a judgement lien on your house, which is something you do NOT want.

So, in a Chapter 7 bankruptcy, when you get the discharge your personal liability to pay the mortgage note is gone, BUT the lien survives, and the mortgage company can still foreclose if you do not pay, or do not pay the taxes or keep the home insured.

In Chapter 13, there is no discharge of mortgage debt, for the most part.  Check with an expert.

However, if there is a judgment lien on your home, that impairs an exemption, you CAN get that lien avoided in the Chapter 7 bankruptcy.

“Impairs” here means that if there were no lien, you could exempt that amount of equity from your creditors.

For example, home worth $100,000, $80,000 of mortgage debt, $10,000 judgment lien.

If there were no judgment lien, in Michigan you could exempt the $20,000 of home equity in a Chapter 7 bankruptcy case.

You can see, you need to consult an expert on these issues.

 

 

 

 

 

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Consumers Cannot Win For Losing

bankruptcy RIGHTS

So the big banks triumph again.  Having brought on the foreclosure crisis, that threw so many consumers into foreclosure and bankruptcy, they made a multi-billion dollar settlement with the government after they were caught with their robo-signing and other shortcuts and fraudulent acts. Of course, the money was supposed to go to the foreclosure victims.Continue Reading

Is Bankruptcy Only Way To Stop Debt Collectors?

studentLOANcollector

More and more stories are coming out about illegal actions  of debt collectors. Sure, filing bankruptcy stops all debt collection activity, but are there other ways to deal with debt collectors? No, that is not a picture of a mean debt collector.  Unless you don’t pay me. Just kidding. DEBT COLLECTOR TRICKS So, most peopleContinue Reading

Bankruptcy And Reverse Mortgages: Two

Kurt OKeefe St.ClairShoresBankruptcyAttorney

Continuing a theme, looking at bankruptcy  versus reverse mortgage options. Once again, relying largely on my friend Tara Tuomey’s work, cited in the link above. One the government gets into an area, it tends to dominate that area. So, in 1988, the feds got in the business of insuring reverse mortgages. Once you do that, you areContinue Reading