Legal Question in Real Estate Law in California

Re: Lien Still Exisits After Bankruptcy

If the creditor placed a lien while you were in bankruptcy the lien is void for violation of the automatic stay. As a practical matter,check with your title company as to what they will accept from the creditor releasing the lien and acknowleding that it is void. Likely, if you got a loan, your interest rate was effected by the lien. You can file either a contempt motion (quickest method) or adversary proceeding to have the lien determined void, and seek sanctions in the event the creditor refuses to remove it. We have obtained sanctions, and attorney fees, and emotional distress damages for our clients in stay violation matters, especially where it is willful or the creditor refused to remove it. You can sometimes get punitive damages as well.

Re: Lien Still Exisits After Bankruptcy

Recording the lien was a violation of the automatic stay. Send a letter to the creditor demanding removal of the lien or you will file an action with the bankruptcy court for sanctions and any monetary damages that you may suffer as a result of the improper lien. If they don't remove the lien, then you should retain a local bankruptcy attorney to reopen the case and file the necessary legal papers against the creditor.

Re: Lien Still Exisits After Bankruptcy

Generally a lien placed on real property, unless avoided during the bankruptcy proceeding, "passes through" bankruptcy. Although your personal liability for the debt giving rise to the lien is discharged by the bankruptcy proceeding, unless the lien is avoided, it remains valid and must be paid in the event of a refinance or sale of the property. See 11 U.S.C. � 524(a)(1) (1988); 3 Collier on Bankruptcy 524.02[1] (Lawrence P. King ed., 15th ed. 1994); Wrenn v. American Cast Iron Pipe Co. (11th Cir. 1994) 40 F.3d 1162, 1164; and Dewsnup v. Timm (1992) 502 U.S. 410, 418, 112 S.Ct. 773, 778-779, 116 L.Ed.2d 903. You may want to speak to bankruptcy counsel to determine whether you can reopen the bankruptcy case to file a motion to avoid the lien.

Of course, your ability to avoid a lien on real property depends upon what type of lien it is. If it is a lien created by trust deed (i.e., 1st, 2nd, 3d, etc. trust deed) you may have no ability to avoid the lien.