How does paying back my debt affect discharged debts? 23 Answers as of July 30, 2011My debt was discharged in a Chapter 7 proceeding a few years ago. I want to obtain a line of credit against my house but I can't because I still have a valid lien in place. If I pay off the creditor with the lien, how will it affect my other discharged debts? Will I have to pay them back as well?
The Law Office of Marvin Wolf | Marvin Wolf
After a bankruptcy is over, you have the right to pay back a creditor. This does not obligate you to pay any other creditor. A Chapter 7 discharge gives the person a discharge, but does not discharge liability against property. However, just because a lien is on your house it doesn't necessarily mean it is valid. Lien validity is too complex a topic for a simple QA forum, but with some other types of bankruptcy, some secondary liens can be removed. You can also try to settle that debt for less than you owe - you lose nothing by trying. Disclaimer: This is general legal information and not legal advice and no attorney-client relationship is formed. Federal Debt Relief Agent and Attorney at Law.
Answer Applies to: New Jersey
Engberg Law Office | Harry A. Engberg
It will not affect the other creditors. The lien maybe be removed by the bankruptcy court. If the the cost of paying the judgment off is more than $300.00, a bankruptcy attorney can normally get it removed for less. The process takes at least three weeks. If time is important, than pay off the creditor, but they must file a satisfaction in the State Court or you have wasted time & money.
Answer Applies to: South Dakota
Bird & VanDyke, Inc. | David VanDyke
No. The 2nd mortgage is a secured lien not unsecured. You have the right to pay any discharged debts if you want. I would try to negotiate a very low settlement offer, no more than 10% and see if they will take that as full satisfaction of the lien against your home. Make sure that if they do accept what you offer that you receive a full satisfaction of the lien and that this satisfaction is properly recorded.
Answer Applies to: California
Law Office of J. Thomas Black, P.C. | J. Thomas Black
No. Payment of one debt does not revive your personal liability for any other discharged debts. You can voluntarily repay any debt that you wish, discharged or not. A bankruptcy discharge eliminates the legal obligation to pay debts, not the moral obligation. The only way that your personal obligation for a dischargeable debt can survive a bankruptcy discharge, is for you to have signed a formal Reaffirmation Agreement prior to the discharge, and filed it with the Bankruptcy Court. I don't know what kind of lien it is on your house. If it is a mortgage or home equity loan that you signed, fine. But if it is a judgment lien, it may have been eliminated in the bankruptcy. Also, judgment liens are not valid against homestead property in Texas, and there are procedures for obtaining the release of such liens under Texas law. Consult your attorney or see Texas Property Code, Sections 52.0012 and 52.041.
Answer Applies to: Texas
Indianapolis Bankruptcy Law Office of Eric C. Lewis | Eric Lewis
What you do and who you pay after the discharge is your own business.
Answer Applies to: Indiana
Ashman Law Office | Glen Edward Ashman
Paying off the lien would get rid of the lien, and does not affect your other debts. However, it sounds like you screwed up. Why didn't you just file a motion to avoid lien in your case when it was filed? (See a lawyer to see if you can reopen your case now and remove the lien without paying).
Answer Applies to: Georgia
Law Office of Maureen O' Malley | Maureen O'Malley
No. Now it all depends on the value of the house and the amount of the lien. If you pay the lien, what's the point of another debt in the form of a LOC? If you didn't reaffirm the house (probably didn't), you can stay there, stop paying (except HOA and insurance), save the money, and let them foreclose a year or two from now. The house was already included in the BK, so it's nothing that will hurt you again.
Answer Applies to: Virginia
Financial Relief Law Center | Mark Alonso
The ch. 7 discharge applies only to unsecured debt or secured debt in which there is no longer security attached to it (ie: you lost the property or let it go). The lien on your property that still exists: is this a lien from a judgment that was entered against you or was this a second mortgage, line of credit or other secured debt? If this was a lien placed against your property from an unsecured debt, the lien should have been part of the discharge in the bankruptcy. However, if this lien is from a second mortgage, or line of credit that was initially secured by your property, then it was not part of the bankruptcy and is still a valid lien on the home.
Answer Applies to: California