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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2889
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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Can a creditor hold a judgment lien on a property, requiring

Resolved Question:

Can a creditor hold a judgment lien on a property, requiring the payment on the initial debt plus interest, as if it had not been paid through the bankruptcy?

Can the creditor continue to accrue interest on the debt during the time that it was in bankruptcy?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
The lender should reduce the claim by the amount paid. Interest can accrue on the un-paid portion of the loan. If the loan was paid off completely through the chapter 13 as a secured debt, the lien can be removed. Otherwise, you will need to pay the balance, or factor that in on the refinance. bankruptcy does not remove a judgment lien, unless the lien interfered with your homestead exemption and you brought a motion to avoid the lien, turning it back into an unsecured debt.
Customer: replied 7 years ago.
Are you saying that the interest can accrue on the unpaid balance as of the discharge, or during the bankruptcy?
Expert:  Terry L. replied 7 years ago.
Interest can accrue on any unpaid portion while the bankruptcy is proceeding.
Customer: replied 7 years ago.
One last question.

When the bankruptcy was filed, my bankruptcy attorney filed the judgment correctly, as a secured claim. However, the attorney for the bank, filed the judgment as an unsecured claim (in error). This is the only reason the bankruptcy was not paid in full by the time it was discharged.

In other words, the judgment would have been paid in full, if the bank's attorney had filed it correctly. Do I have a case for retrieving any of the money not paid during the bankruptcy.

Should the bank bare any responsibility?
Expert:  Terry L. replied 7 years ago.
You and your lawyer have the responsibility to make sure the claims were paid correctly, and should have been corrected during the case. The other money went to pay your other creditors, and cannot be undone after the fact. You can talk to your attorney about the matter, see if they can be of assistance. Perhaps the creditor will be willing to work with you and can negotiate a settlement since they misfiled their claim as well.
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