Real Estate: Perfecting Mechanic’s Liens

In recent editions of Creditor News we have been discussing the benefits of using real estate to improve creditors’ positions. Last month we began a discussion of the benefits of using mechanic’s liens to aid in the collection of your debt.

Virginia Code §§43-4, 43-7 and 43-9 provide for the perfection of the lien by general contractors, subcontractors, and laborers and suppliers. In each section the creditor must file a memorandum of lien at any time after the work is commenced or material furnished, but not later than 90 days from the last day of the month in which he last performs labor or furnishes material, and in no event later than 90 days from the time such building, structure, etc., is completed, or the work thereon otherwise terminated. The memorandum must contain specific information as set forth in the code (and there are forms in the code), and must be filed in the clerk's office in the county or city in which the building, structure etc., or any part thereof is located. The memorandum shall show the names of the owner of the property sought to be charged, and of the claimant of the lien, the amount and consideration of his claim, and the time or times when the same is or will be due and payable, verified by the oath of the claimant, or his agent, including a statement declaring his intention to claim the benefit of the lien, and giving a brief description of the property on which he claims a lien.

In next month’s edition we will explore suits to enforce the lien.

We have experienced attorneys and staff who can examine title, file mechanic’s liens, and litigate to enforce the same.

Bankruptcy: Chapter 13 Plan Confirmation - Good Faith

Two cases decided by Judge Tice of the United States Bankruptcy Court, Eastern District of Virginia, demonstrate a lack of good faith in the debtors' proposed Chapter 13 bankruptcy plans.

In the case of In Re Oliver, Judge Tice denied plan confirmation for several reasons: the low percentage of the repayment of debt (about ten percent to unsecureds), the length of the plan (only three years), the "peculiar nature" of the unsecured claims, and the fact that the petition was filed after another court concluded that a major debt listed in this plan was nondischargeable under the debtors' prior Chapter 7 petition. Each of these reasons went against a finding that the plan was "proposed in good faith" under Bankruptcy Code §1325(a)(3). The matter was brought before Judge Tice upon an objection by a bank, whose claim comprised 80% of the total unsecured debt.

In the case of In Re Kasun, Judge Tice denied plan confirmation for two reasons: a lack of good faith (since the plan discriminated against the debtors' unsecured creditors) and the payment of a nonessential luxury item. The debtors, proceeding in bankruptcy without an attorney, purposed that they retain a sailboat, on which a secured creditor had a $32,000.00 lien, with a $600.00 per month payment, and for which the debtors paid a boat-slip charge of $172.00 per month, while the plan proposed paying unsecured creditors only 34.9% of their claims. The Bankruptcy Trustee filed the objection.

The lesson of Oliver and Kasun - read Chapter 13 plans carefully, do not take proposals for granted, and seek competent legal advice when necessary.

Collections: The Virginia Medical Debt Protection Act

The Virginia Medical Debt Protection Act is a new law effective July 1, 2026 that will likely affect medical practices of all sizes in Virginia. While there was considerable push back from lobbyists and attorneys, many large medical providers agreed with the Act, and it passed in 2025. 

The Act has not gone into effect yet, but medical offices need to start planning now when extending credit to patients. A 120-day notice will be required before we are able open accounts and start collection measures. However, the biggest unknown in this statute is whether there is a prohibition on further collection actions (docketing judgments and garnishments). The language is conflicting in the Act, which will lead to uncertainty as providers pursue unpaid medical debt. 

Dan (current President of the Virginia Creditors' Bar Association) and I (immediate past President of the Virginia Creditors' Bar Association) are keeping an eye on how this Act impacts our clients and our colleagues.

Foreclosure: Obtaining Possession after Foreclosure

Upon purchasing property at a foreclosure sale, it is not uncommon to have a “holdover tenant”. If this occurs, you can obtain possession of the property by filing a Summons for Unlawful Detainer in the appropriate General District Court. The applicable statute requires that the plaintiff prove “a right to the possession of the premises at the time of the commencement of the suit.” The only evidence that is usually required is (a) a copy of the recorded trustee’s deed, since the facts recited therein are prima facie evidence of their truth, and (b) a copy of the notice to vacate sent to the occupant(s).

On the date of the initial return, if the defendant fails to appear, possession will be granted. If the matter is contested, most courts set a new date for trial. In contested cases, issues are usually related to notice and service, so the trustee should be prepared to present evidence that the foreclosure sale was properly advertised, noticed and conducted.

The judgment for possession is not final until 10 days after it is entered, and most courts will not issue a writ of possession during that 10-day pendency. If an appeal is noted within the 10-day period, the defendant must perfect the appeal by posting an appeal bond and paying within 30 days of the date of the judgment the applicable writ and service fees for the circuit court. Most judges are sympathetic to require significant appeal bonds equating with the former mortgage payments.  

Eviction is accomplished using a “Request for Writ of Possession.” A writ of possession may be issued on an unlawful detainer for up to one year from the date of judgment. When requesting the writ of possession, provide contact information for both the Sheriff and the person who will supervise the eviction of the new owner; the Sheriff will coordinate a date and time to serve the writ of possession and maintain the peace while the owner physically evicts the personal property of the occupant(s) and secures the property.