I got a call from a very nice woman who was upset because her closing agent told her there was a lien on her home. The homeowner went online and found no liens. She emailed the documents to me, insisting there was no lien. The documents revealed that an "instrument" had been recorded on her home in the official property records in the county where she lived by Portfolio Recovery after they obtained a judgment against her in court. It seems that when this homeowner applied for a JC Penney Credit Card, the application included a provision that allowed this to happen. I explained that under the Uniform Commercial Code, an "instrument" is a lien that marches to the beat of a different drummer: It doesn't have to be filed with the clerk of court and in a bankruptcy, including the debt in the bankruptcy is enough to discharge it. It's different than a judgment lien.
A judgment lien on your home represents a secured debt, since it is backed up by the value of your home. While Florida homestead laws protect equity in homes from legal judgments, having a judgment lien against your home will create a problem when you try to sell it or refinance. If you sell or refinance your home, the lien would have to be paid at closing in order to provide clear title.
In this case with the instrument, simply filing the bankruptcy and listing the debt discharged the debt. If there had been a judgment lien, I would have filed a Motion with the Court to Void the lien. An order to void a judgment lien would have discharged the debt and lien.
I'm busy working on my blog posts. Watch this space!