Avoidance of Judgment Liens in Bankruptcy

A lien gives a creditor the legal right to seize and sell the collateral property of a borrower who has defaulted on a loan. A judgment or judicial lien is a lien placed against the property by court order, typically as the result of a lawsuit against an individual who has defaulted on a loan or other debt.

When a debtor has filed for bankruptcy, a process known as “lien avoidance” uses bankruptcy exemptions to protect property that might otherwise be seized via a judgment lien.

If you have questions about how to get rid of a lien on your property to stop a foreclosure or repossession in Florida, an attorney with the Loan Lawyers Law Firm of Fort Lauderdale can help you. Avoiding judgment liens is among the multiple strategies we can employ to help you through a bankruptcy and get you out from under insurmountable debt.

Contact Loan Lawyers today for your free, no-obligation consultation. You’ll discover how to get rid of a lien on your property and the sensible, affordable, and proven debt and foreclosure solutions we offer Florida residents.

Types of Liens That Can Be Placed on Your Property

There are several types of liens that may be placed against your property by financial institutions, the government, and the courts. They include the following:

• Bank Lien – If you take out a car loan from a bank, credit union, or other financial institution, their money is used to purchase the car, and until you pay off the loan, the lender holds a lien on your vehicle. Once you pay off the loan, the bank will release the lien, and you’ll have sole ownership of the vehicle. But if you fall too far behind on payments, the bank can repossess the vehicle and sell it to recoup its money. Loans for cars, trucks, motorcycles, SUVs, boats, RVs, and similar vehicles are typically made with a lien attached.
• Real Estate Lien – Most real estate liens are automatically placed when a borrower takes out a mortgage. It gives the lender the right to foreclose and sell the property if the borrower defaults on the loan. Once the mortgage is paid off, the lender releases the property lien.
• Tax Lien – Tax liens are also known as “statutory lines” because the ability to place them is written into law as opposed to a loan contract. If you do not pay your property taxes, the local government can put a lien on your real estate or vehicle, which is basically a threat to seize the property if you don’t pay what you owe. If you fail to pay your income taxes and don’t show the IRS that you intend to pay, the IRS may place a lien on any property you own or on your bank account. This is a last-resort action, but it could result in the seizure of your assets if you are unable to settle your debt with the IRS.
• Judgment Lien – A judgment lien is a lien that a court places on a debtor’s property or other assets. It is usually the result of a creditor’s lawsuit seeking payment of an unsecured debt, such as credit card debt. The lien can remain in place until the debt has been satisfied.

Even if there are no assets to seize, a lien will do serious and lasting damage to your ability to obtain additional credit or loans. A lien against real or personal property may prevent you from selling it.

Can Bankruptcy Remove a Judgment Lien in Florida?

Does filing bankruptcy clear a judgment? Part of the relief a debtor seeks in bankruptcy is to have certain debts “discharged,” or forgiven. In most cases, liens against secured debt (i.e., backed by collateral, such as a house or car) are not discharged in bankruptcy.

Florida law also provides a series of exemptions to what may be seized and sold as part of a bankruptcy. This law allows the debtor in bankruptcy to request that the court remove judgment liens through a legal process known as “lien avoidance.”

How to Avoid Judgment Liens in Florida

Avoiding judgment liens in Florida relies on the principle that the existence of the lien impairs the debtor’s lawful right to claim an exemption under state bankruptcy law.

For example, Florida’s homestead exemption protects a debtor’s primary residence from seizure if it meets certain qualifications pertaining to size and duration of ownership. However, a judgment lien on your home allows the lender to foreclose and repossess it.

To stop the foreclosure while in bankruptcy, you would file a Motion to Avoid Judicial Lien asserting that the lien on your home impairs your right to claim the state’s homestead exemption.

You could also file Motion to Avoid Judicial Lien to get rid of a lien on your primary motor vehicle. This is valid because Florida’s motor vehicle exemption allows a debtor to protect up to $5,000 in motor vehicle equity while in bankruptcy.

Because the law exempts the equity you have in your home or vehicle (its value minus what you owe on the loan), the liens on them may be avoided in part, up to $5,000 for a vehicle but for 100 percent of the equity in your home. Whatever portion of the lien remains will be worth less to the lender, which could increase the possibility of renegotiating the loan or a reduced payoff as part of your bankruptcy.

Legal Help: When to Contact a Florida Lien Removal Attorney

Avoiding judicial liens is a legal strategy that an experienced Florida lien removal lawyer can pursue as part of your bankruptcy case to protect your property from seizure. We may even be able to help you recover exempt property that a creditor repossessed prior to your bankruptcy filing if you contact us in time.

Seeking removal of a lien requires calculating the equity in your house, car, etc., obtaining a Certified Copy of the Order as recorded in county records, and filing a motion setting forth all of the statutory elements that entitle you to avoid the lien.

However, avoiding liens should be part of a broader strategy designed to help you on your way to financial recovery after bankruptcy. At Loan Lawyers, our firm has eliminated over $100 million in debt and mortgage principal for clients across Florida and saved more than 4,000 or our clients’ homes from foreclosure. We can apply our unique and multifaceted approach to resolving your debt problems as well.

Contact Our Florida Bankruptcy Attorneys to Learn More

The Fort Lauderdale bankruptcy lawyers at the Loan Lawyers can guide you through bankruptcy legal system and protect your home and other important property by avoiding liens against them. We are a total debt solution law firm with a proven track record of success in Florida. We are here to help you regain financial stability and to restore your peace of mind.

Call Loan Lawyers today or reach out online for a free, confidential consultation about the rights you have in Florida to protect your assets in bankruptcy.