If you are delinquent on paying your loans or bills and a creditor has obtained a court judgment against you, it is important to determine whether your creditors have placed judgment liens against your real property. A judgment lien is a collection tool that only judgment-creditors can use to help ensure that they get paid what you owe them. If you decide to sell your property that has the judgment lien against it, the creditor will be paid from the sale proceeds.
It is important to tell your bankruptcy lawyer if you have judgment liens against your home. If you are not sure, ask your attorney to do a search of the real estate records. You will want to ask the bankruptcy court to remove the judgment lien from your house. The discharge order does not automatically eliminate liens from real property, so you must file a specific motion seeking such relief. You can also seek to “strip” a lien in certain circumstances. Of course, there are some liens that cannot be avoided, such as your mortgage lien or tax liens.
The discharge of a judgment lien is governed by 11 U.S.C. § 522(f). A copy of the judgment is usually filed in the county where the real estate is located. If you file a bankruptcy case and do not specifically seek to avoid the judgment lien, the underlying debt may be discharged but the lien can remain intact. Thus, the debtor must seek to remove the lien of non-priority creditors under 522(f) to the extent the lien encumbers the value of the debtor’s exemptions in the property. This means that if the amount of equity in your home would be exempt even without the encumbering lien, we can file a motion to avoid the lien. If the court grants the motion, it means that the lien is effectively removed from the title on your property and is no longer valid.
The personal bankruptcy process can be simple and effortless if you retain an attorney who will explain the steps to you. Ms. Anderson is dedicated to walking you through each step, explaining the process along the way. At The Law Office of Diane Anderson, we are determined to help our clients obtain the best results possible.