Q: I filed bankruptcy in July2020 it was discharged in Nov. 2020. Now lawyer wants more money to handle a lien on my home.
I retained a lawyer in July2019. Gave them all documentation plus a summons that I was being sued by a creditor. We filed the bankruptcy july 2020 and it has been discharged 2 weeks ago. I get a call from the attorneys office stating that they received a judgement in the mail that went to one of their other office and now I have a lien on my home. They want me to pay them another $1000.00 to get the lien off. I asked them when was this sent to them, they stated it was in March of 2020 , and the judgement was placed Feb, 2020.,but they just recently got the mail from the other office. They told me if I plan on not selling my home to just leave it, but I don't want to leave it. I feel that this is not my fault and I shouldn't have to pay this. What are my options?
A: The removal of a lien is a separate state court proceeding and is beyond the scope of representation in a Bankruptcy proceeding. $1000 for this in NY, is an incredible bargain! In NJ, I charge $1,750 each.
A: Unless it was included in your contract for the original bankruptcy (doubtful), it is wholly separate.
A: A motion to remove a lien in bankruptcy court is not part of the normal bankruptcy retainer. It is customary for an attorney to charge an additional fee for this service. A lien on the property stays on for 10 years. The debt, if discharged in the bankruptcy can not be collected except if the property is sold or refinanced, the lien needs to be satisfied. You can do nothing, wait the 10 years, and the lien will not be enforceable, or you can have an attorney reopen the bankruptcy, file a motion to avoid the lien (if it interfears with the homestead exemption) and the lien would be gone then.
A: That is an interesting set of facts. I must advise you that I am not licensed in New York, so I can only discuss how I believe things would be in Missouri under Missouri law. This means that you will need the services of an experienced bankruptcy attorney in New York. Perhaps I can at least point in the right direction, since the U.S. Bankruptcy laws are the same, even though the State laws regarding judgment liens may differ.
You mention that you "retained" a lawyer in July, 2019, and it seems that a judgment was taken against you in February, 2020. You later filed your bankruptcy case in July, 2020 and you were discharged "2 weeks ago." It sounds as though you first retained the bankruptcy lawyer in July, 2019, at which time they were aware of the lawsuit. If the lawyer was retained for a bankruptcy case, the lawyer was not simultaneously retained to handle the lawsuit -- these are two separate matters. If nothing was done about the lawsuit (summons), then the creditor would have been able to obtain a default (no response) judgment against you. This resulted in a judgment lien.
It seems that you later reengaged the bankruptcy attorney and filed your case in July 2020, which resulted in a successful discharge. Although the debt as a personal judgment against you is discharged, the bankruptcy discharge does not remove the judgment lien from your property. (This is the result of having ignored the lawsuit prior to the bankruptcy). To avoid the lien, a separate Motion to Avoid Lien would need to be filed in your bankruptcy case. A Motion to Avoid Lien is not part of a normal proceeding and I would bill separately for handling that matter. As another attorney has commented, (and I agree), $1000.00 to handle a lien avoidance would be a bargain. Keep in mind that, it you do nothing, interest will accrue on the judgment at the lawful rate until it is paid. Unless the lien is avoided, you will not be able to sell or refinance without the judgment and interest being paid in full.
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