If you are currently involved in litigation or you believe a lawsuit will be filed against you soon, you may be curious how a bankruptcy filing can help. There are many issues related to filing a Chapter 7 or Chapter 13 in relation to the timing of a lawsuit, so it is important to confer with an experienced bankruptcy attorney before taking any action. The party who has filed a lawsuit against you is seeking to obtain a judgment against you. Once the creditor has received a judgment against you, the judgment can be filed which allows the creditor to get a judicial lien against any real estate you own in the State where the judgment was filed. Judicial liens are given priority according to when they are filed. Thus, the first lien to be filed has priority over subsequently filed liens. This means that if there are mortgages recorded before the judgment lien, the mortgages have priority. Because the value of most houses is less than the amount owed on the mortgage, judgment liens rarely do much good. How does your bankruptcy case impact judicial liens? Bankruptcy law permits a debtor to “avoid” a judicial lien to the extent it impairs the debtor’s exemption in the property. In other words, if you have equity in your house, you can set aside or avoid the judicial lien to the extent it impairs your exemption in the property. You can also avoid a judgment lien if there is no equity in your property. In most cases, whether you file your Chapter 7 or Chapter 13 before or after a creditor has a judgment against you, your filing can generally provide a solution for you. Of course, no two lawsuits or bankruptcy cases are identical, so it is essential to let a bankruptcy attorney review your individual situation to determine the best course of action to take. If you are interested in learning more about bankruptcy cases, contact Levitt & Slafkes, P.C. We are experienced in handling a variety of bankruptcy issues. Our offices are conveniently located in South Orange, New Jersey. Please call us at 973-323-2953 or online to schedule your free initial consultation today.