Bankruptcy
I have a problem. I am about to buy this property from a seller. The title search just came in stating they owe a $14,000 tax lien. This is in Philadelphia. THere is a law firm that buys tax liens from the city of philadelphia and just sits back waiting to get paid. So I'm thinking its no longer a municipal lien. Anyway, the seller filed bankruptcy. All the lien holders were notified to be at the bankruptcy hearing. THe law firm never showed up at the hearing so the courts included it into the bankruptcy. To this day, the seller has been discharged from the bankruptcy, so I'm assuming that the seller fulfilled his obligations for the bankruptcy. The law firm is claiming they never recieved a dime from the bankruptcy and will force the house up for sheriff sale next month. They will not release the lien from the property. What do I have to do to get this resolved? Who do I need to talk to? Can these attorneys say screw the bankruptcy and do what they want? Does any body know what could be going on? All responses are appreciated.
Thanks in advance
yipes,
If the debtor received his bankruptcy discharge, the debtor no longer enjoys the benefit of the automatic stay against creditors realizing againt the debtor's assets. At post-discharge, creditors are free to foreclose.
Martin
yipes i didn't think the bankruptcy can include the muni lien. well, if he filed ch. 7, then he loses everything and trustee sells everything to try to pay off liens - in such case, they'd probably have gotten something if not all. if the owner filed ch. 13 - then they probably didn't include the liens, so they'd get nothing.
after discharge (if not paid), then everyone's free to go back to collections. i'd look at the original bankruptcy petition if available (to be sure) and if it's not listed there contact the attorneys and try to settle before letting it go to sale. maybe they'd work something out. if it IS listed and was discharged then they may not have the proper paperwork for the sale to happen anyway and it'll be postponed by the court. i'd still check with common pleas and or municipal court about any outstanding judgments on the owner and verify that they weren't satisfied. lastly, i'd check to see if it was actually dismissed (b/c not able to fulfill obligations) or discharged.
sorry for the longwinded response, just trying to cover all the bases. hopefully someone more qualified would reply as well.
Like Jackman says above discharged is different than dismissed. Discharged would be where all debts are released and paid even if at a discount or nothing. Dismissed means the debtor did not fullfill the plan requirement and still owes money to the creditors. If dismissed and it sounds like it is the case then the creditors may sale the tax lien and get ownership of the property. You may contact those evil attorney carpetbaggers and see if you can buy their position. You may also contact the owners to see if you may be able to buy the house and buy their right to redeem the property by paying the tax lien plus penalties and interest etc, I do not know the redemption laws where you are but here in Texas the homestead owner has 24 months to redeem the property by paying the taxes plus 25% interest the first year and 50% the second year. Check to learn how this may work for you.
Good LUCK and Thank You
Hope this helps some
Ted Jr
Check to see that the bankruptcy filing included the Muni Lien.
I dont think it can be. You would have to ask a lawyer to see if you are allowed to include it, but clearly it is important to see if it was included before you bother arguing if it was right to do so.
If the lien is still in force, then try to negotiate with the Lawyers.
DO NOT LET THEM KNOW THE HOUSE IS IN PLAY. At that point they could just wait for the sale and they will BE PAID IN FULL at closing.
Try to keep it general, like buying liens is something you do often. This way they have no reason to believe they will be paid anytime soon. Your low offer looks better.
They are still probably savvy enough to know what is going on. They bought the lien in the first place.
So, you may have to pay the whole thing.
Good Luck,
N.
Their bankruptcy has been discharged not dismissed. I seen the S Schedule which included all the creditors who were included in the bankruptcy. These tax liens were purchased by the attorneys and from the city of Philadelphia. Thats how I know they are no longer municipal liens. This lien is not owed to the city of phila. The city has been paid and has nothing more to do with it. These attorneys are very rude and nasty as well as non negotiable. They want their money. My point is, if they wanted their money so bad, why didn't they show up at the bankruptcy hearing. The bottom line is they filed bankruptcy and that lien was included as stated on the S Schedule and the bankruptcy was discharged not dismissed. To me, this should be a no brainer and all that the title company should need to close this deal without paying these attorneys. Obviously I must be wrong. My first post must have been misunderstood. Does anyone have a reply for this. Sorry for not being clear the first time. All of you guys and gals input is greatly appreciated.
Thanks
Gov't liens are never discharged, or dischargeable, in Ch 7.
Therefore, even where most/all the debts ARE discharged (unless the discharge of a particular debt IS contested, for fraud, for example) the liens are still on the property, just like any other valid liens...the 1st, the 2d, etc...all stay on the property until a superior lien holder forecloses and wipes them out.
BK does NOT discharge liens, only debt.
Bankruptcies CAN discharge liens if it is a judgment lien, and, if such judgment lien in anyway impairs the debtor's homestead exemption in the property.
It can be a powerful tool when working with BK properties.
Debtor would first have to file a
"motion to avoid non-consensual judicial lien" DURING the bk. If he or she fails to do so, the Lien still exisits against the property.