Info on Bankruptcy by qvs11237

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									                    Liens
              Michael Moore
Beadle County States Attorney
General Info
Definitions
   Lien: a legal right or interest that a creditor
    has in another’s property
       can follow person and will attach only to property


   Judgment: a court order, can be against a
    person or a thing (property)
What is a County Aid Lien?
   A County aid lien is not a lien against a
    person, but against property.
       Thus, even though the debtor may get discharged
        from personal liability for the money paid by the
        county, his/her property remains subject to the
        county’s lien after the bankruptcy is completed.
       Can have lien against a person with no property
        but cannot do anything with it until person
        acquires property
More Info Regarding County
Aid Liens
   SDCL 28-14-8 – certified copies of county aid
    liens may be filed in any other SD county
       i.e. if recipient moves away or owns real estate
        elsewhere – the same “all property” lien is created
        there
   SDCL 28-14-15 - commissioners can
    compromise liens
   SDCL 28-14-19 – lien is terminated
    immediately when the recipient’s estate is
    closed or terminated
   NO CHAPTER OF BANKRUPTCY
    DISMISSES COUNTY AID LIENS
Types of County Aid Liens
   County Poor Lien
     SDCL 28-14

   Court Appointed Attorney Lien
     SDCL 23A-40

   Prisoner Care Lien
     SDCL 24-11
County Poor Liens
Can County Poor Liens
Survive Bankruptcy?
   County Poor Liens CAN survive bankruptcy
    if:
       The debt is incurred (by payment of the poor
        relief); and
       The lien statement is filed with the auditor before
        the bankruptcy petition is filed with the bankruptcy
        court
What claims does the county
have?
   SDCL 28-14-1 – County has a claim against a person who
    receives poor relief
   SDCL 28-14-3 – Burial expense claims paid by county are
    also included in poor lien scheme
   SDCL 28-14-15 – County holds lien on all real and personal
    property of the recipient for the amount of assistance given
     This includes joint tenancy and homestead interests
       (SDCL 28-14-6 says the lien applies to all property of the
       poor person’s spouse too – even if only owned by
       spouse; as long as both names appear on the lien
       statement)
     This also includes real or personal property acquired
       after the lien attaches
     Lien becomes effective immediately upon payment by
       county and filing with Register of Deeds
     Additional payments by county attach to the same lien
Court Appointed
Attorney Liens
Court Appointed Attorney
Liens
   SDCL 23A-40-11 – lien created against all real & personal property of any
    person (including parents of a minor child, up to $1500) for whom court
    appointed attorney is provided (23A-40-12 requires the judge in criminal
    cases to set the amount of a PDO lien for counties that use PDO’s)
     NOTE: this provision does NOT say the lien includes after-acquired
        property, like the poor lien section above. However, I believe the lien
        does attach to property acquired after the lien arises, since it rests
        against all property.
   SDCL 23A-40-10 – court in criminal cases may order payment of court
    appointed attorney fees (CAAF) or public defender office fees (PDOF) – any
    payments made under these orders are credited against the county’s poor
    lien
   SDCL 23A-40-13 – lien is fixed on payment and filing of statement of claim
    by Auditor (here again, the lien statement can be filed in other counties
    where the recipient has or may acquire an interest in real or personal
    property)
   SDCL 23A-40-14 - commissioners can enforce, foreclose, satisfy,
    compromise, settle, subordinate, release or “otherwise dispose” of the lien
   SDCL23A-40-15 – this lien cannot be foreclosed against homestead or
    exempt personal property
Court Appointed Attorney
Liens (cont):
   SDCL 26-7A-32: In juvenile cases have lien
    up to $1500 against parents for A&N, CHINS
    and Delinquent Child cases;

   NOTE: 26-7A-32, says if there is no
    adjudication of the child a lien is not allowed
Prisoner Care
Liens
Prisoner Care Lien
   SDCL 24-11-45: prisoner liable for cost of his
    confinement: room & board, medical, dental,
    optometric, psych, vocational ed training, chemical
    dependency training received while in jail
     (the judge in criminal case can waive this – I don’t
       think they normally do)
   24-11-45.1 - county has lien – just like ch 28-14 –
    for these expenses
Other Important
Things To Note
Automatic Stay
   Purpose: prevent race to the courthouse
   Starts the moment the BR petition is filed with the
    BR clerk
   Stops almost ALL debt collection activity
   This is EXTREMELY important in the poor lien
    context!
   Also important in real estate tax context! (tax
    certificates)
“Perfecting” a Lien
   2 kinds of debt: secured and unsecured
   Secured debt = debt is guaranteed, in a way, by
    collateral.
   Two steps to making a debt secured:
     1) attachment of the security interest;
             Attachment happens when the debtor signs a security
              agreement, or in our cases, when the county makes
              payment on behalf of the debtor.
       2) perfection of the security interest
             Perfection occurs when the security interest becomes
              enforceable as to third parties by being filed in the
              proper place.
What is dischargeable?
   If payment has been court ordered, neither court appointed
    attorney fees, prisoner room and board fees, nor health
    care is dischargeable under bankruptcy.
     These things are statutory liens, and they survive
        bankruptcy. In fact, they don’t have to be court ordered.
     Judges can NOT preclude filing of a county aid lien for
        court appointed attorney’s fees.
   The debtor’s personal liability to repay the obligation is
    discharged, but the liens can still be enforced against
    his/her property.
   The only liens that get discharged are ones that were not
    perfected (filed with the Register of Deeds) before the
    bankruptcy petition was filed.
Does the County have to be notified of a
bankruptcy filing in order for the case to have
any effect on county liens?

   County liens generally stay in place anyhow, so
    this question might be moot.
   Bankruptcy law generally says that creditors who
    don’t receive notice do not have their debts
    discharged – but that said, the bankruptcy court
    ALWAYS grants debtors permission to amend
    their petitions, even after the fact, to name
    creditors that the debtor originally forgot.
     When this happens, if the debt was originally
       dischargeable, it remains so.
Timeframe for Filing a Lien
   There is no timeframe before bankruptcy filing that a
    lien statement needs to be filed.
       Although some liens filed just before a bankruptcy
        petition might be set aside as “preferences,” this does
        not apply to statutory liens. (BRC 547(c)(6))
   County aid liens need only be filed before (minutes,
    even) the bankruptcy petition is filed with the
    bankruptcy clerk.
       Once you have paid a bill that gives rise to a lien, you
        can hurry to file the lien, even if you know the person
        who received county aid is about to file bankruptcy.
Lien Foreclosure
   28-14-11 - lien can be foreclosed by action –
       this means we can sue to satisfy the lien (plus interest, costs,
        and foreclosure expenses) –
       BUT this can’t be done until a year has passed since the last
        payment is made to or for the recipient’s benefit – it also can’t
        be done against the homestead during the recipient’s lifetime
        (or surviving spouse’s interest in homestead)
       NOTE: I think we can only foreclose against specific property
        under this provision – and it seems like we will not likely know
        what personal property to foreclose on in most cases
   28-14-12 - property acquired through foreclosure to be sold
    by commissioners after taking bids on 2 weeks’ published
    notice
   28-14-13 - if county forecloses lien on real estate, it can
    rent it out or sell it and apply the proceeds to the same fund
    from which the lien $ was drawn
To what exactly does the lien
attach?
   The county aid lien attaches to property, not to the
    person who receives the county-paid services.
    Thus, you can decide to foreclose the lien against a
    person who has bought property that was subject to
    a lien.
   If that buyer purchased title insurance, it will be the
    title insurer’s (or abstractor’s) problem to clear up
    the county aid lien.
   Even if you don’t foreclose, the lien should show up
    at a future property transfer (or mortgage), and the
    county should still eventually get paid.

								
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