Full question:
Last year (2005), my husband and I filed for a Chapter 7 bankruptcy. The final decree was signed and entered on 8/2/05. There is a creditor (who was named on the list of creditors, given notice, and did not dispute the discharge of the debt) who placed a lien on our personal bank checking account, which we considered exempt property. The creditor's lien froze any action on said account. Even after the discharge of the debt, the lien is still on the account. The bank involved will not release whatever funds are in the account to us or anybody else, even though I have court documents detailing the discharge of any debt to this person. What can I do to have this lien removed and again have access to this account? This account was used for our personal bills, etc. There is less than $3000.00 is this account. The person that filed the lien has not removed it (even though the debt was discharged) and will not communicate with the bank involved. Can I take this matter to a small claims court to get the bank to release these funds?
- Category: Bankruptcy
- Date:
- State: Texas
Answer:
A bankruptcy discharge does not prevent enforcement of valid lien filed prior to the bankruptcy petition. While a discharge relieves the discharged debtor from personal liability, the discharge does not preclude in rem actions (actions against property) by secured creditors.
Valid liens that have not been disallowed or avoided survive the discharge of the underlying debt. Nothing in the Bankruptcy Code imposes an affirmative duty on a lien holder to assert its in rem rights prior to the debtor's securing of a discharge. A lien holder does not violate the discharge injunction by waiting until a case is closed before asserting its rights.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
