Legal Question in Bankruptcy in South Carolina
discharged bankruptcy lien
My wife and I jointly files chapter 13 in June of 1999. The case was dischraged in Feb. of 2004. We are selling our home and a second mortgage that was included in the discharge had filed a lien on the house. The second mortgage company has since filed bankruptcy and closed. No one knows who to contact. We have been told that we need to file a request with the court to remove the lien. Is this possible and if so, how long does such action take? We are set to close on the sell and purchase of the new home in one week. We have been told that the second mortgage released our personal liability on the mortgage but kept the lien against the property. After searching local county records, we have found that the date on the lien was the exact time that we filed bankruptcy. The second mortgage was included in the repayment plan and did receive some of the money owed to them over the five year period that the plan was in effect for. This has been a shock to us because we were under the impression that the second mortgage had been removed long ago. Please provide any information you can regarding this issue. Also, is it possible that no one knows who to contact about the lien? All of the phone numbers have been disconnected.
1 Answer from Attorneys
Re: discharged bankruptcy lien
This almost reads like a law school exam question! Let me try to tease it apart. First, if the entity holding the lien on your home through the second mortgage no longer exists, then I believe the court has grounds to dissolve the lien. It would require court action to undo the lien, I'm afraid, but once you establish the company's dissolution, it should be fairly straightforward.
The date of recording of the second lien is only important as to questions of priority. There's nothing illegal (or for that matter, necessarily unusual) about creditors perfecting liens shortly before or after debtors file for bankruptcy (as long as they had court approval to do so if the automatic stay was in effect - and I'm not even sure they'd need approval to file a lien, which could be construed as a ministerial act, assuming all formalities otherwise had been complied with and recording was the only step left in the process).
As you are probably aware, a secured debt has two "parts" to it - one, the personal liability of the debtor, and two, the rights in the property that serves as security or collateral for the debt. In a bankruptcy, it's only your personal liability that is discharged. The underlying lien survives, unless modified or avoided.
As for the last question - yes, it is indeed possible. Once a company dissolves, it ceases to exist. It's treated just like a dead person, in some ways - it simply no longer exists. It's possible to track down old corporate filings and see who the registered agent was but you have to understand that this person no longer has any legal obligation to the company or its clients (barring some fiduciary capacity), and may be of little help.
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