LIEN AVOIDANCE IN A CHAPTER 7 BANKRUPTCY

There is a judgment lien on my home; can I get rid of it?

If certain requirements are met, yes.  Lien avoidance is a powerful and important tool available in Chapter 7 bankruptcy. If you are enduring financial difficulties, you may have ended up having a judgment lien applied to your personal or real property. A judgment lien arises after another party wins a judgment against you in court. For example, a credit card company may sue you for non-payment of your credit card balance. If the other party wins on the merits of the case or you fail to respond to the lawsuit, the other party can obtain a judgment against you.  In California, the judgment can become a lien against any real estate located in the county where the judgment was recorded. In many states the creditor can also place a lien against your personal property by filing the notice of judgment lien with the Secretary of State.  If a judgment lien has been recorded against your real or personal property, bankruptcy can help avoid the lien.  It is best to remove such lien as quickly as possible.

If you file a Chapter 7 bankruptcy and you have judgment liens that you would like to avoid from your property, you have authority to do so under bankruptcy code11 U.S.C §522, which allows a lien to be removed to the extent that it impairs an exemption to which the debtor would have been entitled in the absence of the lien. Exemptions are what protect your property that has value from becoming part of the bankruptcy estate.

What is the difference between a consensual lien and a judgment lien? A consensual lien is a bargained for lien - this is normally referring to liens like your mortgages or equity line of credit. You agreed to have a lien recorded against your property in exchange for financial benefit (money loaned to you). A judgment lien is not consensual. This type of lien is normally recorded against your property after your creditor obtains a judgment against you. Thus, the rule in a Chapter 7 bankruptcy is that you can avoid a judgment lien since it was involuntarily placed on your property and you cannot avoid a consensual lien since you agreed to have it recorded against your property. The courts do not want to interfere with any contracts that you voluntarily entered into.

 The good news is that bankruptcy can essentially eliminate the judgment lien on your home. If you own a home and a creditor has obtained a judgment against you, ask your bankruptcy attorney about filing a Motion to Avoid a Judicial Lien. In the appropriate situations, your attorney can file a motion with the bankruptcy court requesting that the judicial lien be removed from your home upon completion of your bankruptcy. If the bankruptcy court grants the motion, then the judgment creditor will no longer have a lien on your house. You also need to ensure that the judgment debt is listed on your actual bankruptcy petition in order for the debt to be eliminated. This can also be done after your bankruptcy case is over, but there are limits and it requires additional legal fees to reopen your bankruptcy case. Although your bankruptcy attorney will charge an additional fee to file the Motion to Avoid a Judicial Lien, it is well worth the attorney fee to eliminate thousands of dollars in additional liens on your home. For further information on whether a Motion to Avoid a Judicial Lien will be best in your situation, contact the Leventhal Law Group, P.C., committed to providing personal service for a reasonable fee.at (818) 347-5800 or send an email to schedule a free initial consultation and to speak directly with attorney Jonathan Leventhal, serving all of Los Angeles, Ventura and. the San Fernando Valley.