Wednesday, May 06, 2015

SJC addresses bankruptcy and real estate liens

The Massachusetts Supreme Judicial Court in a decision released today clarified the effect of bankruptcy on an existing judicial lien on the debtor's real estate.  The Court held in Christakis v Jeanne D'Arc Credit Union, that unless the bankruptcy court expressly excludes such a lien, the lien survives the discharge in bankruptcy of the debtor.  The court reasoned that Federal bankruptcy law erases the personal liability of the debtor for the debt but it does not automatically erase the liability against the real property that was created when, as in this case, an Execution was recorded against the debtor's property.  So, while creditors cannot pursue any collection activities against a debtor who has been discharged in bankruptcy, the creditor can pursue the sale of the debtor's present or former real property that was encumbered pre-bankruptcy filing with a judicial lien such as an attachment or execution.

Congratulations to Lowell attorney Sandra Boulay who represented Jeanne D'Arc before the SJC.

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