Bankruptcy filed in 2011...everything was discharged September 2011. Citibank Home Equity Line of Credit was included and discharged. March 2015 I sold my home. Surprise! Citibank Home Equity Line of Credit was found by escrow to have placed a lien on my home in November 2011! This money was taken by escrow to satisfy the lien. THIS SHOULD BE ILLEGAL, RIGHT? WHT DO I DO?????
A home equity line of credit is a secured debt that survives a Chapter 7. Your personal liability is discharged - meaning if the home was foreclosed on and Citibank still had a balance due, they could not sue you personally for the balance; however, the deed of trust remains on the property after a chapter 7 and Citibank would entitled to be paid through escrow upon sale of the property.
It sounds like Citibank was the second mortgage on your home. If that's the case, of course they had a lien - that's the point of a second mortgage. Your bankruptcy discharged your personal liability on that loan, but bankruptcy does not automatically get rid of liens; you can only do that if you meet certain criteria, depending on the type of lien. Sorry for the bad news, but if they had a valid lien that you did not or were not able to remove in the bankruptcy, they were entitled to payment of proceeds from the sale of your house.
Are you certain about the date of filing of the lien? If it was indeed filed after the date of discharge, then Chase has violated the discharge order and is subject to penalties. If the lien was filed before the discharge, then the debt was discharged but the lien remains and you should have either filed a motion to void the lien or paid Chase to pull the lien. Escrow should have alerted you to this lien and you should have addressed it with legal counsel prior to closing. But the analysis all starts with when the lien was filed. Contact a bankruptcy attorney and help you sort it out.
I concur with my colleagues. The lien you say was placed on your home in 2011 was probably placed on your home at the same time you got the HELOC, at the beginning of the loan. Since the lien survived the BK, escrow has a legal obligation to pay valid liens from escrow proceeds. Sounds like nothing illegal here. I'll bet you did not use a lawyer in your BK because if you did, he/she would be your first call, not here on .
I think you are confused. A secured lien (such as a HELOC) is not automatically discharged in bankruptcy, so it may be the debt was not discharged, in which case it was properly paid from escrow. Also, there would be no reason to file a second lien in the event of discharge, unless a second debt arose after the bankruptcy, in which case it was properly paid from the escrow. You should have an attorney examine the situation for you.
