Here is an interesting story about the experience of a judgment creditor by the name of Charlotte, and what happened regarding Charlotte’s judgment lien after bankruptcy.
Charlotte was taken to the cleaners by a shady character named Bob. Bob cheated her out of several thousands of dollars in a real estate deal a few years ago. When Charlotte woke up and smelled the baloney she decided to bring a civil suit against Bob. In the course of events Charlotte ultimately won her court case. Charlotte took her Certificate of Judgment to the county Judge of Probate and filed it which created a judgment lien on Bob’s house in the same county.
Bob never paid any money on the judgment debt he owed her. A couple of years after winning her lawsuit, Charlotte received notice that Bob had filed for Chapter 7 Bankruptcy protection. Due to the bankruptcy, her lawyer informed her that she could not attempt any collection activities on the judgment debt. Later she found out her judgment had been discharged in Bob’s bankruptcy. This meant that Bob was forever free from the judgment debt that had existed.
Charlotte was naturally disheartened to find out that Bob would get off the hook for the thousands of dollars that he had scammed from her. But, she couldn’t do anything to change the facts of the judgment being discharged in bankruptcy.
This seemed to both Charlotte and Bob as the end of the story. Charlotte and Bob had no further contact with each other at anytime after the bankruptcy. She figured it was in her best interest to just forget about her loss and get on with her life. She didn’t waste any time crying over spilled milk.
Three more years went by after the bankruptcy. One day out of the blue, Charlotte received a phone call from Sharon. Charlotte didn’t know who Sharon was. Sharon informed Charlotte that she was considering purchasing a home in the county. This particular home was the one Bob owned and where he had resided for over ten years. In preparing for financing, Sharon’s bank uncovered the fact that a judgment lien had been recorded against the property a few years prior. Charlotte confirmed to Sharon that this indeed had happened. Sharon had been advised by her bank that Charlotte’s judgment against Bob had been wiped out in bankruptcy, but that the judgment lien on the property might still be viable.
Charlotte was flabbergasted. She quickly contacted her attorney. She told him everything that Sharon had said about the prospective sale of Bob’s house and the situation about the judgment lien. Charlotte’s attorney did some quick research and came up with the fact that the bankruptcy court never actually ordered that the judgment lien on Bob’s real estate was being discharged. The judgment was discharged, but not the lien.
To make a long story short, Sharon did go through with the purchase of Bob’s house. At the real estate closing, a check was issued to Charlotte for almost $11,000 to clear up the title issues caused by her judgment lien. Charlotte was ecstatic. She finally received justice for the loss she had experienced at the hands of Bob five years prior.
Charlotte was fortunate. She assumed that there was no chance to ever get any money from Bob once his bankruptcy occurred. She didn’t know her lien survived the bankruptcy. It is wise for any judgment creditor to do further research when one’s judgment debtor goes through bankruptcy. If the court doesn’t specifically order that the judgment lien be extinguished, it well may survive. We need to remember that just because a judgment has been discharged does not automatically mean that the judgment lien on property has been discharged.
Ah, hope springs eternal in the judgment creditor’s breast.
Don’t hesitate to consult a good judgment attorney or bankruptcy attorney to gain further clarification on this subject and to obtain professional advice.