Posted by Ryan Blay on November 10th, 2010 in Uncategorized, creditor, Discharge, judgments, liens, title
Suppose you’ve filed your Chapter 7 Bankruptcy, attended your Section 341 meeting of creditors, completed your financial management course requirements, and received that piece of paper from the court called “Discharge of Debtor”. Congratulations, you are out of your bankruptcy and this discharge will be effective the date the judge enters the order.
Now let’s say you want to sell your home a few years later, and you are preparing for closing. A title company will do a search of any liens on your home and find a judgment lien from creditor ABC Company on your house. Why is that still there? Your bankruptcy attorney told you the debt would be wiped away in Chapter 7.
Well yes and no. You are no longer required to pay on the debt. But if a creditor received and docketed a judgment in your local circuit court because you defaulted on a credit card or couldn’t pay a hospital bill, that judgment is still on the court records. And it won’t be removed merely by filing a bankruptcy. There is another step to take.
We would take a copy of that bankruptcy discharge paper, attach a copy of the old judgment, write a respectful letter to the clerk of courts and ask that the judgment be cleared. The total fee for this: $5.00 plus a stamp. Send a courtesy copy to the old creditor and their attorneys and you should have little problem getting this done. If the creditor objects, they may be subject to violations of the bankruptcy discharge.
This extra step is important. Our offices received a call from a broker recently where a homeowner was facing this very problem in selling his home. He had filed bankruptcy over five years ago, yet he and his attorney didn’t take that final step. So he has had to postpone the closing to let us put this old matter to rest. If you want an attorney who will take that extra step and avoid these troubles years later, you will want to call 1-866-LAKELAW or 262-694-7300 in Wisconsin.