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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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My husband and I filed bankruptcy in Sept 2011. We are selling

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My husband and I filed bankruptcy in Sept 2011. We are selling our house in a short sale however, we have a lein on our house from Citibank. An offer has been made to Citibank for $1000.00 to release the judgment without satisfying or extingushing the judgment on us. How will this affect my Husband and I.
Thank you for your question. Please permit me to assist you with your concerns.

That very much depends. Was this debt under lien recorded and listed in your initial bankruptcy petition? Was that debt discharged?
Customer: replied 3 years ago.

We did not know about the lein until we started the short sale. When we filed bankruptcy, it was our understand that all debts would be covered under the bankruptcy. Our bankruptcy was discharged as chapter 7


 

Thank you for your follow-up, Linda.

Your understanding of Chapter 7 filings is generally correct but for one very important distinction--for any debt to be discharged, it has to be formally listed in the petition first. So if this lien was something you had no idea about, it was listed against the property but never filed under your Chapter 7 filing, then the lien itself is valid. That also means that if the lien is released against the property, the underlying judgment or cause for the lien is likewise not discharged and still active. The holder of the lien could then potentially go ahead and record it against your other assets or otherwise attempt to pursue collections of this debt. This appears to still be a valid debt and removing the lien from the property does not change in any way their ability to pursue collections.

Good luck.

Customer: replied 3 years ago.


Dimitry, This account with Citibank was listed on our Bankruptcy, but not the lein as we had not idea it was placed at the time we filed bankruptcy. When I spoke to Citibank they have advised me that they show the Bankruptcy. How does that work?


 

Thank you for your follow-up, Linda.

That helps you tremendously. If this debt was reduced to a lien but the debt itself was discharged, the holder of the lien cannot collect on the debt. That debt is no longer actionable against you. Once that lien is removed from property, the lien is not able to be pursued against you directly. That is excellent news as the lien ends up not being able to be attached to anything once it is removed from the property. Otherwise you could go back to BK court and file for a contempt hearing, and essentially sue them for failing to honor the terms of the discharge.

Good luck.

Customer: replied 3 years ago.

Thank you for this information you have been very helpful. I have just one more question.


 


Why does this letter from Citibank Attorney accepting the $1,000.00 to remove the lein but says without satisfying or extigusishing the judgment?

Linda,

Thank you for your follow-up. The reason is simple--you and your spouse can always voluntarily elect to pay the debt on your own so as to improve your credit history. Showing it as 'satisfied' or 'extinguished' would mean that you would no longer even need to do that as your history would improve. Having a debt be 'discharged' does not make the debt disappear--the debt is still valid and still against you, it is just impossible to collect against. This is different from a det that is 'satisfied' (or paid off to satisfaction of lender), or 'extinguished (the lender voluntarily decided to not pursue). Hopefully that difference clarifies the language.

Good luck.

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