If you have been unable to pay your bills and creditors have obtained judgments against you, it is likely that you have judgment liens place against your home. A creditor places a judgment lien against your home to help ensure that the creditor gets paid what it is owed. The lien allows the creditor to be paid from the proceeds if you sell your home. If you are interested in removing the judgment liens from your real property, filing bankruptcy may be a good option.
It is important to discuss this strategy with a bankruptcy attorney in advance. A bankruptcy discharge does not automatically eliminate the liens recorded against your house. However, in some circumstances, you can “strip” a lien. Of course, there are certain liens that are not avoidable, such as your mortgage or tax liens. In most cases, a judgment lien can be discharged pursuant to 11 U.S.C. § 522(f). A copy of the judgment is typically recorded in the county where you own real property. It is important to note that in a bankruptcy case, the underlying debt can be discharged while the lien remains intact. Thus, a debtor must take action under Section 522(f) to remove the judicial lien of a non-priority creditor to the extent the lien encumbers the value of the debtor’s exemptions in the property. In other words, if the value of your equity in your house would be exempt even without the encumbering lien, you can file a motion to avoid the lien. If the court approves the motion, the lien is effectively stripped from the title on your house and is no longer valid. If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, P.C., at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.