Whoops! “I filed bankruptcy, but forgot there was a lien on my house!”

alarmWhat happens if you file a bankruptcy case, then years later you go to sell or refinance your house and discover there is a lien from one of the creditors still on it?

Well, it may be possible to reopen the case and file a motion to have the lien removed. This motion would be filed with the bankruptcy court, and be decided by the bankruptcy judge.

Out West, the Ninth Circuit Appeals Court recently ruled that four years after receiving a discharge was not too long to wait to reopen a case and remove a lien.

Closer to home, I just reopened a case and stripped a lien two years after the debtor received his discharge. No problems were encountered along the way, although it would have been much better (and cheaper) for the homeowner to have addressed the problem while the initial case was still open.

So if you have filed bankruptcy, but are unpleasantly surprised by liens when you are selling or refinancing a property, don’t despair — instead talk to a bankruptcy lawyer, who may be able to “repair” the situation instead!


By Doug Beaton

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