Long story but here are the basics. Please bear with me because I'm panicking.
Filed for Ch. 13 in May 2011. Discharged in August 2016. Since then, reestablished credit, scores currently sit above or in the high 700s/ low 800s.
Currently in the process of refinancing our home. A large judgement from 2010 resulting in a lien on our property was found. It was during a time we were dealing with identity theft and many accounts in husband's name were opened. This was not caught when we first filed BK.
Saw my attorney today. (He was the attorney who helped us at the end of our case, but not the attorney with whom we started). His advice is that it would be a good idea to reopen our BK case to get this lien stripped. Based on our case history, he thinks this lien will be dismissed because, at the time the lien was placed, there was no equity in the property. We were also able to get a lien strip of our second mortgage because at the time, there was no equity in our home.
Here is my question: How will re-opening my case affect my credit now? Will it be just like I'm in BK again?
Any insight or help would be really appreciated as I am worried.
First off - no, it would not be like you're in BK again. I'm not an attorney, but I think it would not affect your filing date but would definitely affect your discharge date as if your BK was successfully re-opened there would be a new discharge date. I agree with your attorney that the lien would be stripped, but not because there was no equity, there doesn't have to be equity in the amount of any lien. Think an underwater mortgage: Say you took out mortgage for $200,000 in 2007. But by 2010 the value of your home declined to only $150k. There's a lien on your property for $200k (minus payments), but the value is only $150k.
I think the lien would be stripped because in bankruptcy all debt incurred prior to filing is included, whether listed or not.
But I think there is a better solution than re-opening your BK: If the lien is the result of identity theft and fraudulent opening of the account that resulted in the lien then your attorney should be able to file a case to get the lien removed. The debt is not legally yours, so the lien is not legal, your cannot place a lien on someone's property for someone elses debt. Another tactic your attorney might use is to file legal action to remove the lien because your BK removed the debt even though it was not listed.
But you will need to forget about the refi for now, whether you re-open BK or file legal action to get the lien removed as fraudulent or discharged in BK, it will take months to accomplish.
Cleaning up the initial post/question:
"We filed for Ch. 13 in May 2011. Discharged in August 2016. We are in the process of refinancing our home. A judgment lien, recorded in 2010, was found by the title company and/or the potential new lender. This lien was not caught when we first filed BK. Our bk attny advised us to reopen the Chapter 13 and seek to strip off the judgment lien based upon lack of equity since that is what we did to get rid of our second mortgage. How will re-opening my case affect my credit now? Will it be just like I'm in BK again?"
In direct answer to your questions, 1) reopening the case should not impact anything other than the case and, 2) such has nothing to do with being back in bk since you have your discharge. Reopening to clean up something that should have been taken care of during the case is not unheard of.
However, while reopening your case to get rid of the judgment lien may be the proper way to go, (which, by the way, does not mean you lose your discharge) you have not given enough details.
1. What state are you in?
2. Is this your homestead residence under State law?
3. How much is the allowed homestead exemption?
4. How much is owed on the 1st (and now only) mortgage?
5. What was the value of the home when you striped off the 2nd mortgage?
6. What is the value of the home today?
Please answer the above questions.