Free Case Evaluation

 
 
X Close
Phone Call Us 414-326-9231
608-260-7133
Toll Free 866-678-9352
Text Us 414-277-7742
You can also feel free to text us at 414-277-7742 to set up your FREE appointment with our attorneys today

Court says liens still attach to prior agreements

When a debtor files for Chapter 7 bankruptcy, a creditor can request a supplemental proceeding if there is a question of the settlement of a debt. An appeals court recently ruled that liens by creditors made after supplemental hearings could be enforced, despite the fact that the issues may be unresolved or there may be error on the part of the creditor.

This decision springs from a case in which the debtor owed $1.7 million to Town Bank, which requested a supplemental hearing in the debtor's bankruptcy case. However, the debtor assigned his interest in a lawsuit settlement to another creditor, Heartland Wisconsin Corp. Town Bank promptly pleaded with the court to honor what it considered a prior claim due to the supplemental hearing.

While the bank had failed to file the documents related to the supplemental hearing with the clerk of the Circuit Court, Town Bank had served the debtor. Heartland argued that the supplemental hearing was flawed and created a "secret lien" that was not evident to other creditors who might be filing their own actions. However, the appeals court ruled that Town Bank's only responsibility was to serve the debtor; the responsibility for filing with the clerk rested with the supplemental commissioner.

The essence of this ruling was to make it clear that property acquired after a supplemental hearing can still be attached to pay debts. If a debtor is facing a complicated creditor matrix and large debt structure, it is very important for him or her to consult a bankruptcy attorney to ensure that all rules and regulations are followed in the filing of the action.

Source: State Bar of Wisconsin, "Creditor Liens Still Attach to Property Acquired After Supplemental Proceeding," Joe Forward, Dec. 13, 2012

No Comments

Leave a comment
Comment Information

Contact Our Milwaukee Law Firm

Reach Miller & Miller Law, LLC, online or call us at 414-326-9231 to schedule a free initial consultation. Our law office also provides Spanish language services. Se habla español.

To schedule an initial consultation, call 414-326-9231 or contact Miller & Miller today.

Free Case Evaluation

* indicates required field

 
 

Milwaukee Office
735 West Wisconsin Avenue
Suite 600
Milwaukee, WI 53233

Phone: 414-326-9231
Fax: 414-277-1303
Milwaukee Law Office Map

Kenosha Office
6123 Green Bay Road
Suite 210
Kenosha, WI 53142

Phone: 262-326-1669
Kenosha Law Office Map

Brookfield Office
200 S. Executive Drive
Suite 101
Brookfield, WI 53005

Phone: 262-261-0665
Brookfield Law Office Map

Madison Office
2810 Crossroads Drive
Suite 4001
Madison, WI 53718

Phone: 608-260-7133
Madison Law Office Map