If you’re considering filing for bankruptcy, you should understand that you must not only fully disclose all property that you own either entirely or in which you have any partial ownership interest but also provide your attorney sufficient documentation substantiating any such ownership interests/claims. You must provide your attorney with copies of all titles, deeds, real estate mortgages, life insurance policies, retirement account documentation, homeowner’s insurance policy information, vehicle loan promissory notes, financial statements, tax assessment statements, tax returns, copies of judgments and all other like documentation. Generally an attorney will require you to provide your financial information for the past 3 years. This means you’ll have to provide all personal records along with your public records. Because gathering your financial information correctly can be difficult without experience and legal knowledge, the help of a bankruptcy attorney is essential. Behm Law Group, Ltd. offers professional legal support and counsel that can help you throughout the process of filing for bankruptcy in St. Peter, MN.
While you gather your personal records for your attorney to consider in relation to your case, you should also consult with the local court administrator’s office, court recorder’s office and county tax assessor’s office to examine any public records you may have against you. Records such as deeds, county tax assessor valuations for any real estate you own, judgment liens and title certificates for vehicles are public records.
Another example of a public record of your financial history is a property lien or mortgage lien.
What is a Property Lien?
Property liens are a matter of public record and they legitimize and provide notice of the claim your creditor has on your property to secure the money you owe to that creditor. It is used by a creditor to provide public notice to other creditors that it has first secured standing on certain property you own. In other words, it is announcing to all other creditors that it is first in line to collect its debt against the property. For example, if there is a mortgage on your home regarding money you owe to a bank, the mortgage will be publicly listed in the county recorder’s office. Any other bank who may want to lend you money will search the county recorder’s office and see the property lien to the first bank. Any such bank will understand that it will not be able to utilize your house as collateral for any financing it extends to you to the detriment of the first bank. If it does elect to extend financing to you and if it does want to use your house as collateral, the property lien to the first bank will provide the second bank notice that it will be second in line to the first bank if you default on your payments and it proceeds to initiate foreclosure proceedings against your house. Liens work to protect a creditor’s claim on the property if you file for bankruptcy relief. A properly filed property lien is enforceable against any and all parties in a bankruptcy proceeding.
A bankruptcy filing does not extinguish the creditor’s property lien. If you want to retain your house through a bankruptcy proceeding, you must continue to pay on any outstanding property liens against it. Any equity or value above the amount of any property liens can be protected from your creditors, however. For instance, if your house is worth $100,000 and you owe $20,000, you have $80,000 worth of value or equity. You can protect the $80,000 equity/value against all of your creditors and against the bankruptcy trustee but you must still pay the underlying $20,000 to the bank that holds the property lien. If you don’t pay the underlying $20,000 property lien, the bank that holds the property lien can still initiate foreclosure proceedings against your house.
With the help of a bankruptcy attorney you can easily access public records concerning your finances to determine if you have any property on which your creditors have claimed property liens. It’s important to be aware of any liens on your property, especially if you’re filing for Chapter 7 bankruptcy.
For more information about property liens and to learn how Behm Law Group, Ltd. can help you file for bankruptcy in St. Peter, MN, contact us at (507) 387-7200 today.