One of the most common calls I receive from former bankruptcy clients goes something like this:

“Walter, I received my bankruptcy discharge years ago. I’m trying to sell my house, and the title company found an old judgment lien. What do I do now?”

Many people assume they must reopen their bankruptcy case and return to Bankruptcy Court. In Michigan, that is often unnecessary.

Michigan law provides a surprisingly simple procedure for extinguishing many judgment liens after a bankruptcy discharge.

The Difference Between a Judgment and a Judgment Lien

When you file Chapter 7 bankruptcy and receive a discharge, your personal obligation to pay most debts is eliminated.

That means the creditor can no longer:

• Garnish your wages.
• Garnish your bank account.
• Sue you on the debt.
• Attempt to collect the discharged obligation.

However, before bankruptcy, a creditor may have recorded a judgment lien with the Register of Deeds in the county where you own real estate. The lien can continue to appear in the public records long after the debt itself has been discharged.

This often causes problems when selling or refinancing a home.

Michigan Law Provides a Solution

Many bankruptcy attorneys and title companies are unaware of a powerful Michigan statute.

Under Michigan Compiled Laws § 600.2809(6)(d), a judgment lien is extinguished when the following documents are recorded with the Register of Deeds where the judgment lien is recorded:

1. A copy of the debtor’s bankruptcy discharge; and
2. A copy of the bankruptcy schedules listing the judgment debt.

The statute specifically provides that the judgment lien is extinguished once those documents are recorded, unless there is a bankruptcy court order determining that the debt was nondischargeable that has also been recorded with the Register of Deeds.

In plain English, if the judgment debt was discharged in your bankruptcy case, Michigan law may allow you to eliminate the lien simply by recording the proper bankruptcy documents.

What Documents Should Be Recorded?

Typically, the following documents are recorded with the county Register of Deeds:

• A certified or file-stamped copy of the Bankruptcy Discharge Order.
• Copies of the bankruptcy schedules showing the judgment creditor and debt.
• Any additional recording cover sheets required by the county Register of Deeds.

Once recorded, the judgment lien is extinguished under Michigan law.

You May Not Need to Reopen Your Bankruptcy Case

Many people spend money reopening bankruptcy cases when Michigan law already provides a remedy.

In fact, a Michigan Bankruptcy Court decision specifically noted that even when a debtor could not avoid a lien under Bankruptcy Code Section 522(f), the debtor could still pursue extinguishment of the lien under MCL 600.2809(6) or other applicable state law.

That does not mean reopening a bankruptcy case is never necessary. Certain judgment liens may still require a lien avoidance motion, particularly where title companies or creditors dispute the lien’s status. Every case must be evaluated individually.

However, many discharged judgment liens can be resolved through the recording procedure provided by Michigan law.

Important Exceptions

This procedure generally does not apply if:

• The debt was declared nondischargeable by the Bankruptcy Court.
• The creditor obtained a bankruptcy court judgment determining the debt survived bankruptcy.
• The lien involves a debt that was not discharged.

Michigan law specifically excludes debts that were determined to be nondischargeable in bankruptcy.

Don’t Wait Until Closing Day

Unfortunately, many homeowners discover an old judgment lien a few days before a scheduled real estate closing.

At that point, everyone is scrambling—the seller, buyer, title company, realtor, and lender.

If you know a creditor obtained a judgment against you before your bankruptcy filing, it is wise to investigate whether a judgment lien was recorded and whether it should be extinguished now rather than waiting until you decide to sell your home.

We Can Help

At the Law Offices of Walter Metzen, we regularly assist former bankruptcy clients who discover old judgment liens years after receiving their discharge.

If a title company has found a judgment lien against your Michigan property, we can review the bankruptcy case, determine whether the debt was discharged, and advise you regarding the proper procedure to extinguish the lien under Michigan law.

A bankruptcy discharge is supposed to provide a fresh start. In many cases, Michigan law provides a straightforward path to clearing old judgment liens and moving forward with your life.