Bankruptcy conjures up many thoughts, good and bad. Whether you feel it’s your get-out-of-jail-free card to eliminate obligations or you’re drenched with a sense of failure for not being able to handle those obligations, there’s something you need to know. For those considering bankruptcy as their ticket to unloading bad debt and are planning on filing in 2012, take heed: it might not be the easy out you think.
When you file a bankruptcy and it gets discharged, it doesn’t always mean that you are free from paying on an account that you included in your bankruptcy. Here’s why: if your hired attorney does not do his/her due diligence, it is possible that he/she does not know about liens filed on judgments you may have. Maybe your attorney did not see any liens filed in the database of the county court you live in and, therefore, figured that there weren’t any to pursue. If this is the case, your attorney will most likely not contact the court to make sure of this and/or may not consider other counties you previously lived in. Your attorney will be doing you a disservice.
Quite often courts can fall behind in entering these documents into their databases, due to high volume and low staffing. Attorneys know this but often rely on the courts’ databases, given their own time constraints and heavy volume of cases. Unfortunately, this happens all of the time. Consumers are quite unaware of it until they decide to sell their homes and are told they cannot because of an amount owed to a creditor that was included on their bankruptcy.
To completely free you from obligation to creditors through the bankruptcy, given the loan is dischargeable in the first place, your attorney needs to specifically avoid any liens in the language of the bankruptcy. Sure, this added language will cost a few bucks more out of your pocket but if this is not done, you will still be obligated to pay for the amount of the unavoided lien plus any interest that has accrued in the meantime. So should this be something that pops up years after your bankruptcy was discharged, you may be in for a very unpleasant surprise.