You go through the process of filing Chapter 7 bankruptcy,
get your bankruptcy discharge, your fresh start, and get on with your life
Couple of years later, you try to sell or re-finance your home, and cannot, because creditors still have liens showing on the record.
How did this happen?
Well, you and your attorney should check the record for liens recorded against your property as part of the bankruptcy process.
Then you can force the creditor to remove the lien during the bankruptcy case.
I am talking about judgment liens, or non-consensual liens, which means, you did not agree to pledge your house as collateral for this creditor.
In Michigan, any unsecured creditor with a judgment against you can record that judgment as a lien on your real estate, your home, by filing papers in the county where you live with the register of deeds.
It is a long, expensive process to foreclose on that lien, to take your home, and the creditor would have to pay any prior liens, like your mortgage.
So that rarely happens.
What does happen is, the creditor sues, gets the judgment, puts the lien on the home, and waits for a sale or re-finance, when the liens have to be paid.
Now, it could be that some company bought the debt after you filed bankruptcy, or the original creditor sues you after bankruptcy.
In Detroit, we have trash can service.
Someone drives by your house and drops the papers in the trash, and says you are served.
So you could have a judgment against you without you knowing it.
Until you try to sell your house.
It could be the creditor does not know about the bankruptcy, if they bought the debt and were not told.
A bankruptcy case can be re-opened to grant relief to the debtor, and enforcement of the discharge is a good reason.
There is no filing fee due in this situation.
I always give creditors another chance to do the right thing before filing a motion to hold them in contempt.
I usually send them the motion I am going to file, so they know exactly what is coming and I can show the Judge they had a chance to resolve the issue out of court.
Prevention is better than cure, so check the title records on your home before you file bankruptcy.
After Bankruptcy, Creditor Lien On My Home?