Lien vs Debt - Did not own home why lien?

[saboten]

Prior to filing bankruptcy there was a 20K judgement filed against me in April 2000 which was the main reason I had to seek a bankruptcy attorney. They had garnished funds from my bank account and I could not pay my other bills.

At the time of my bankruptcy filing I did not own a home, never had. In my bankruptcy filing the company that got a judgement against me was listed as one of the creditors for 18K.

I was in Chapter 13 for three years and then converted to Chapter 7 which was discharged in April 2004. Through a chain of events my brother lost title to our family home. Using an attorney and begging relatives I was able to pay off the title loan and get the house back in his name. He agreed to Quit Claim the house to me until we could sell it because he couldn't trust himself not borrowing against it. He has a gambling problem. I wasn't sure if it was the right thing to do but my elderly sick mom and disabled sister lived in the house. I thought I was doing the right thing to protect the family by having him quit claim it to me.

Now, we have an offer on the house. Escrow did a preliminary title search. The judgement filed in April 2000 which was before my bankruptcy is on this report. I did not own a home at the time the judgement was entered against me. I did not own a home when I filed bankruptcy. Is the lien on me or the house? If it is the house, how could they do this if I didn't own it at that time? The only thing I owned outright was a car not a house. Is there such a thing as putting a lien on something you might own in the future?

Someone advised me to ask if my attorney had filed a "motion to discharge or avoid lien" at the time of my bankruptcy filing, but they have not returned my call yet.

Escrow is scheduled to close in a week. Will I have to pay this money back even though I was really only safekeeping our home from my brother who is sick with a gambling addiction?

The mortgage is still in my brother's name. The remaining mortgage is 300K with prepayment penalties. Does this count for anything?

Judgement filed against me in April 2000.
Chapter 13 filed in May 2000.
Conversion to Chapter 7 granted in Dec. 2003
Chapter 7 discharged in April 2004.
Brother quit claim home to me in June 2004.

[HHM]

Welcome to the cold hard reality of dealing with judgments in Bankruptcy. Judgments are liens against ALL your property and any property you later aquire. So yes, if the house is in your name, and there is a judgment against you, they have a lien against the house.

Also, Judgments are not automatically discharged in bankruptcy. Which is why its always better to file BK before a judgment is taken against you. Also, filing Motions to Avoid liens are sometimes outside the scope of a BK attorney's representation, but he should have advised you about the consequences of not avoiding the lien.

[Chris]

So is it too late to even file for bankruptcy once there is a judgement against a person because the judgement will never go away anyway? You mentioned that judgements are not automatically discharged with a bankruptcy, what would be an example of how they could be discharged vs. not automatically discharged? Any websites you know of to educate me on this?

[HHM]

Regarding Discharge, lets take an example,

Lets assume you have a Chase Visa Card. Simply by listing it in your Schedule of Creditors, that debt will be discharged (assuming everything else goes will with your BK)

Lets assume Chase sued you and obtained a judgment against you. If you simply list the card in your Schedule of Creditors, the Judgment will not be discharge and will pass through the BK. Typically, you file a Motion to Avoid Lien, but there are numerous technicalities and exceptions to what can and cannot be avoided. So yes, you can file a BK when there is a judgment against you, but you need to find an experienced lawyer, and will have to pay extra to get rid of the judgment.

Also, Lien avoidance applies to then existing property of the debtor, what I don't know off the top of my head is if the judgment can still be used as a lien against future acquired property or if its extinguished forever.

[Chris]

wow, scarry, I'm glad I'm going next week to complete the filing then. I wouldn't want to wait so long that lawsuits, liens, or judgements get started.

[saboten]

If my bankruptcy attorney did not advise me or tell me about the option to file a motion to discharge or avoid a judicial lien, would he be negligent or liable? I feel sick that the judgement against me will cost my family financially.