After discharge----order to extinguish 2nd mortgage which was stripped

[suzychapstic]

Hello,
I received my discharge 5/5/15 (wonderful!) and 5/8/15 took my discharge paperwork and my order granting motion for valuation of collateral and determination of secured status to the county clerk and recorder. My attorney had instructed me that this was all that I needed to do to have the 2nd lien removed. Title company pulled my home address, and still shows the 2nd lien......Is there another step involved to get an order for the 2nd lien to be extinguished?

There appear to be two different things in my paperwork....
1. "Pursuant to 11 U.S.C Section 506(d), if an order entered in this case valuing a creditor's secured claim at $0, the lien is extinguished by operation of law upon the entry of the debtors discharge..." (This is on my discharge paperwork)

On my Order granting motion..........It states my lien has a $0 balance and is unsecured......but it also states
2. "Upon successful completion of the debtor's plan, the debtor may request an order that the lien is extinguished"

I will call my attorney in the morning, but thought I might be able to get some information here from other's experience. I have listed my house for sale, so it is time sensitive that the 2nd lien be off of my record, if we may call it that.

Thanks in advance.
Suzy

[justbroke]

I really don't know since there may have been a change in how your District handled lien strips when your case was confirmed versus today (when your case was discharged). You should definitely ask your attorney as they will have more local knowledge. Your title insurer is probably looking for a "Release of Mortgage" and they may not find something that reads such a way. I don't know how your County Recorder recorded your discharge order and order stripping lien (and I don't know if they were "recordable").

Or, your county recorder is just weeks behind processing things. I know that in Florida, most County Clerk's of the Court (acting as County Recorder) are about 2 weeks behind. For example, my County Clerk / Recorder is up to May 11, 2015 as of today (May 21, 2015). I don't know if Colorado has this delay in processing.

Are your records available online? If so, have you looked to see if the (certified) order stripping the lien and discharge were recorded?

[LadyInTheRed]

I think a delay at the county recorder is a likely possibility. Did you get conformed copies of the orders at the County Recorder? If so, send the conformed copies to the title company.

[spidge]

Is your district requiring an Adversarial Proceeding to complete the lien strip? This query comes from what is happening to me in my district and am just spit balling here.

As much as I would hate to wait I would wait a month to recheck and see if the lien has been removed. Fingers crossed it is a simple matter of waiting for them to complete the recording.

Side note. Have I mentioned that I am still fired up that these rule changes can effect filers from before the rules were changed!

[dmc-2008]

Does anyone know if there is a change in California?

[LadyInTheRed]

We don't even know that there was a rule change in whatever Colorado court Suzychapstic is in. I am pretty sure Justbroke was just throwing that out as a possibility. A rule change in one court does not mean the same rule would be changing in another court.

This would be a local court procedural rule. Another Chap 13 filer with a lien strip reported that the discharge order ordered the mortgage company to record a release of the lien. In the Northern District of California where I am, my attorney has to submit a separate order removing the lien for the judge the sign. My order valuing the lien has the same language that Suzchapstic's "order granting motion" has. But, her discharge order states that the lien is extinguished. That should be sufficient once it is recorded.

Another good point that JB made is that the title company may not be looking for the right document. Suzy, make sure they are looking for the order valuing lien and the discharge order.

[LadyInTheRed]

I decided to look for Colorado rules and see that there is only one District in Colorado. The applicable rule is Rule 3012-1. Paragraph (9) of that rules says:

(9) Order Extinguishing Lien: Upon successful completion of the debtor’s plan, the debtor may request an order that the lien is extinguished. See L.B. Forms 3015-1.11 and 3015-1.12 (Chapter 13 Debtor’s Certification to Obtain Discharge) and L.B. Form 3022-1.2 (Chapter 11 Individual Debtor Final Report and Motion for Final Decree).

That rule has not been changed since at least December 1, 2009. But, the forms changed in July 2010.
The following is from Form 3015-1.11 Debtors Certification to Obtain Discharge:

3. Valuation of Collateral Pursuant to 11 U.S.C. § 506
[ ] I previously filed a Motion for Valuation of Collateral and Determination of Secured Status Under 11 U.S.C. § 506 (the “Motion”) (docket no. ____) as to the real property described below. The Motion was granted on (month/day/year) , (docket no. ____).

Before July 2010, there was an additional paragraph requesting an order extinguishing the lien.
The following is from FORM 3015-1.12, Order On Chapter 13 Debtor's Certification to Obtain Discharge

THIS MATTER COMES BEFORE THE COURT on the Debtor’s Certification to Obtain Discharge (Docket No. ____) and this Court’s prior Order Granting Motion for Valuation of Collateral and Determination of Secured Status (Docket No. ___). This Court previously ordered that the lien held by (name of creditor) .on (description of property) is valued at zero ($0) and is entirely unsecured for purposes of the debtor’s chapter 13 plan. The debtor has successfully completed all plan payments and the debtor’s discharge is ready to enter.

But, the following commentary was added to Form 3015-1.12 in July 2010:

Due to modification of the discharge form, this form of order is no longer needed. In the explanation portion of the discharge form the following information has been added: “Pursuant to 11 U.S.C. §506(d), if an Order entered in this case valuing a creditor’s secured claim at $0, the lien is extinguished by operation of law upon entry of the debtor’s discharge.”

I am assuming that the "discharge form" is an order for discharge, but I can't find that form on the court website.

Suzychapstic, it sounds like your discharge order contains the modified language included in the commentary to form 30115-1.12. So, the recording of that order should suffice. But Rule 3012-1 still allows you to request an order extinguishing the lien even though the change to the discharge order was designed to make it unnecessary.

I bet once the title company reads a recorded discharge order, it will agree the lien is extinguished.

[justbroke]

You are Researcher In Chief LadyInTheRed.

[spidge]

Does anyone know if there is a change in California?

Hi DMC, I am not sure if it was a rules change but this was left up to the judge. I was granted the 0 value while in the 13 and stripped upon completion of the 13. Then my original judge retired and the new guy requires a AP to complete the strip after discharge.

http://www.cacb.uscourts.gov/sites/cacb/files/documents/JudicialPracticesSurvey.pdf

Pg 83. Not all judges require it. I thought the order was already given to strip the lien before my 341 even started as I paid extra for it to be done. I will have to find that in my records. I am not sure why, if the order was already given it cannot stand, but my attorney states, and I do agree, this will allow me to complete the recording without the need for any delay from the lender.

Sorry if a bit off the OP topic.

[dmc-2008]

Thank you!

[mylife]

Chiming in. We just received our discharge and am waiting on the lien release for the strip so we can sell our home. We are also waiting on the attorney to respond. Any ideas on the process in Maryland?