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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37513
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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My brother and I entered into a partnership llc in Tennessee

Resolved Question:

My brother and I entered into a partnership llc in Tennessee in 2003. Last fall, unfortunately, we had to file Chapter 7 Bankruptcy. The banks involved with the mortgages on the business properties we held, foreclosed, took back the properties, and sold them at auction. My question, one of the two banks involved attached a lien on my home to cover the deficiency after the property was auctioned off. The lien is such that if I die first, my wife gets the home free and clear. If she dies first, then they take ownership of the property to settle the debt. Tennessee has a homestead exemption of $25,000. I am married and age 64. No children. My bankrupty attorney said he had never heard of a bank doing this. I don't have the money or assets (other than our home) to pay off the $100,000+ deficiency. Do I have any recourse? Thanks. XXXXX
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.

Please clarify:

  1. When you say that you filed bankruptcy, do you mean that the LLC filed bankruptcy or that both you and your brother each filed personal Chapter 7?
  2. Did you personally guarantee the mortgages on the properties held by the LLC?
  3. On what date (exactly) was the lien filed on your property?
  4. On what date (exactly) was your bankruptcy petition filed?

Thanks in advance.

Customer: replied 5 years ago.

1. Personal Chapter 7 Bankruptcy.

2. Bankruptcy attorney removed personal guarantee BEFORE filing Chapter 7 for each of us.

3. Sorry, I don't have the paperwork here in front of me, but I can get them for you later if needed. Chapter 7 for me was filed in December 2010. Lien was attached to the house in February 2011.

Expert:  socrateaser replied 5 years ago.
Thanks, that's all I need.

A lien filed against your property after you filed bankruptcy on a debt discharged in bankruptcy violates the bankruptcy injunction and you can demand that the lender release the lien immediately or file a contempt action and have the lender sanctioned with daily fines until the lien is released.

Not sure why your bankruptcy lawyer is not explaining this. Makes me suspicious of his/her motives. It could be:

1. The attorney screwed something up and if you figure out what that something is, you would have a malpractice suit against the attorney.
2. The attorney doesn't' think you can afford to pay for the court action to force the release of the lien (though the attorney would be entitled to attorney's fees paid by the lender), so he/she doesn't want to bring the motion to the court "on the come," as it were.

Contact the attorney and ask why you can't bring a contempt action to force the lender to release the lien. If the response seems cautious, then contact a legal malpractice lawyer.

For a referral, see this link.

Customer: replied 5 years ago.
Guess, I'm getting old! Must have had a brain fart. The personal Chapter 7 filing removed the personal guarantee. Chapter 7 was filed on August 28, 2010. February 2011 was the end of the 6 months claim by creditors. Lien was attached to our home on March 24, 2011. We've really felt in the dark about the proceedings. Our attorney said he has never seen a bankruptcy like ours, nor the actions the Bank's attorneys have stooped to to reclaim the deficiency judgment. We had our savings and retirement invested in our business, and we held on as long as we could until we had no other recourse than file Chapter 7. It seems the attorney was as surprised as we were about some of the actions taken during the bankruptcy. Right now my brother and I are living off social security benefits. We couldn't hire another lawyer right now even if we wanted to.
Expert:  socrateaser replied 5 years ago.
My answer is the same, re suing the creditor for contempt to force the release of the lien.

Malpractice lawyers work on contingency.

A bankruptcy lawyer can take a contempt action on contingency, because the lawyer will get paid by the creditor. But, the lawyer doesn't have to take the case.

You can just sit on your hands and wait until you can afford to sue the creditor to release the lien. There's no statute of limitations, though the court can deny your request if your delay prejudices the creditor. I don't know how your delay could cause the creditor prejudice, but were I in your shoes, I would want to try to get this matter resolved as soon as I could.

Hope this helps.

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 37513
Experience: Attorney and Real Estate Broker -- Retired (mostly)
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