If your creditors have filed collection lawsuits against you and obtained judgments, it is likely that they have placed judgment liens against your home. A judgment lien is a tool used by creditors to help ensure they are paid what they are owed. The lien permits the judgment creditor to have its debt paid from the proceeds when you sell your house. Having judgment liens against your home can make it difficult to sell and it can mean you do not receive any proceeds from the sale.
If you want to remove a judgment lien from your home and you cannot afford to pay it, you may want to consider filing a Chapter 7 or Chapter 13 case. It is essential that you confer with a knowledgeable bankruptcy attorney in advance to ensure this is possible in your unique situation.
Discharging a judgment lien is not automatic. However, in some situations you can “strip” the lien from your home. You should also be aware, however, that certain liens such as mortgage or tax liens are usually not avoidable.
Pursuant to 11 U.S.C. § 522(f), a judgment lien can typically be discharged. In most jurisdictions, a copy of the judgment is recorded in each county where you own real estate. When you file a personal bankruptcy, it is important to understand that the underlying debt may be discharged while the lien on your home remains intact. Thus, it is necessary for the debtor to take action under Section 522 to remove the judicial lien of the non-priority creditor to the extent the judgment lien encumbers the value of the debtor’s exemptions in the home. This means that if the value of the equity in your home would be protected by an exemption even without the judgment lien, the debtor can file a motion to avoid the lien. If your motion to avoid the lien is approved by the court, the lien is stripped off the title on your home and it is no longer valid.
If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald & Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get-out-of-debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!