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Do Liens Survive the Bankruptcy Discharge in Arizona in Chapter 7 Bankruptcy Cases? Do Mortgages? Do UCC Security Interests?

By Joseph McDaniel, Esq.

In general, yes.

I'll get back to you on this, but remember; the general rule is that a properly perfected security interest of any sort remains in existence even after your discharge.

In some cases, you can scrape off a judgment lien on your house that impairs your homestead exemption, but that is typically not a part of an uncontested Chapter 7 Bankruptcy case in Arizona.

So if you think you need to scrape off a or terminate the existence of a judgment lien, talk to your bankruptcy attorney about it.

And, yes, that costs more than an uncontested Chapter 7 Bankruptcy in Arizona.

Count on it.

Because it involves a bundle of additional work!

Now, if you're not planning on selling your house, ever, subsequent to your bankruptcy, it's probably not an important issue. Nor is it important if you're planning on letting the property go by way of a trustee's sale in Arizona, which is the way those things normally happen if you stop making payments.

But unless you specifically discuss this issue with a bankruptcy attorney in Arizona, and unless the debtor's bankruptcy lawyer has specifically contracted to undertake this project, it probably isn't going to get done in your Chapter 7 Bankruptcy Case in Arizona.

Just so you know!



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Full post as published by Arizona Bankruptcy Attorney Blog on October 18, 2010 (boomark / email).