Avoidance of Judgment Liens in Bankruptcy
Are you trying to sell or refinance your home and are encountering title issues due to a judicial lien? This is not uncommon, unfortunately. Approximately 800,000 people filed for bankruptcy relief in the past year, and many of these debtors filed because they had lawsuits against them for debts they had incurred. Many debtors have multiple lawsuits filed against them. Oftentimes, bankruptcy debtors assume these debts are automatically wiped out entirely in the bankruptcy. However, when it comes to judgment liens (judicial liens), that is not the case. Your personal liability is discharged in the bankruptcy, which means creditors cannot collect from you after your bankruptcy is filed, but steps must affirmatively be taken to effectively eliminate the lien, which is encumbering your home. Judicial liens can pose issues when trying to refinance or sell your home, because they must be paid off prior to closing, which can prove quite costly in certain cases, especially due to accrual of interest over the years. Fortunately, one of the benefits of bankruptcy for judgment debtors, is that if they meet the requirements, the lien may be extinguished; however, a motion to avoid the lien must be filed and granted by the bankruptcy court for this to be accomplished.
A judgment lien or a judicial lien is a final judgment resulting from a lawsuit that was filed against you. The judgment is usually then recorded in the county where you own your residence and the judgment at that point becomes a lien against your home. Unlike a foreclosure, the judgment creditor cannot force you to sell your homestead property; however, if you later decide to sell or refinance, the judgment lien must be satisfied. §522(f) of the Bankruptcy Code does not apply to foreclosure judgments or judgments arising out of domestic support obligations and the property from which the lien may be avoided must be exempt at the time of filing the bankruptcy case, for example, your homestead.
Luckily, wiping out this lien might not prove as cumbersome as you might expect, regardless of the amount owed, how much interest has accrued, or the value of your home. If the debt existed when your bankruptcy was first filed and it was not a voluntary lien (such as a mortgage), or arising out of domestic support obligations, and the property was exempt, then the judgment lien may be avoided by filing a motion to avoid judgment lien pursuant to §522(f) of the Bankruptcy Code.
If your bankruptcy case was discharged and closed months or even years ago, do not fret. You may file a motion to reopen the bankruptcy case solely to avoid the judgment lien, in conjunction with the motion to avoid the judgment lien. Once the motion to avoid the lien is granted, the bankruptcy case will be closed once again. To effectuate the lien avoidance, you must then have a Certified Copy of the Order recorded in the county records. If you qualify for this relief and meet the requirements, this process will resolve title issues relating to judicial liens against your home and you will be in a much better position financially.
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Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 1,500 homes from foreclosure, eliminated $1,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, and debt collector violations, negligence and fraud. Contact us for a free consultation to see how we may be able to help you.