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Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 30897
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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A married couple live in a house together. The husband is

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A married couple live in a house together. The husband is the only one listed on the title of the house. However, the wife took out a second mortgage in her name and used the house as collateral. The wife says even though she is not listed on the title, she still had a "spousal" interest in the home that she can use as collateral for the second mortgage. The wife filed bankruptcy some time after taking out the second mortgage. She did not list the home as property in her bankruptcy schedules. Now it is a year after the bankruptcy, and the wife and husband are trying to sell the home. But the second mortgage on the house is preventing them from doing so. The creditor holding the second mortgage was listed as a creditor in the wife's bankruptcy, but she listed that creditor as an unsecured creditor and did not inform her bankruptcy attorney that the creditor was secured.

The first question - if the wife is not listed on the title of the home, can a creditor take a security interest in the home on a second mortgage signed only by the wife? Can a creditor get a judgment lien on that same house for a debt only in the wife's name?

The second question will depend on the answer to the first question.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney. Thanks for your question.

If the house was purchased during the marriage OR if the property was used as the marital residence, then the wife would have an equitable ownership interest, but it wouldn't be a complete interest - it would be an equitable interest determined by the court.

So yes, the creditor can take a security interest in the wife's interest, but it would not cover the husband's interest. If a default were to occur, a judge would have to determine the interest of the husband and wife to determine what the lien attaches to.
Customer: replied 3 years ago.

Ok. The second question - what is the latest after a bankruptcy has been filed that a motion to avoid a lien can be filed?

Generally, a motion to avoid a lien must be filed after the first meeting of creditors and before the closure of the case.

However, a motion to avoid lien is generally limited to judicial liens (judgment liens) and liens related to personal property. So, a mortgage lien would not generally be a lien that could be avoided. Here's a link you can read:
Customer: replied 3 years ago.

This is for a second mortgage where the first mortgage is worth more than the equity in the home. In Minnesota, a second mortgage in that situation can be stripped. Just wasn't sure how late a motion to avoid the lien can be filed - any idea how late?

There's no specific time limit in the bankruptcy code other than before a petition to discharge the case is made. However, there could be a local court rule or a deadline listed on the scheduling order. BUT USUALLY, there's no specific deadline except that it must be done before the case is discharged.
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