Removing a Judgment Lien in Bankruptcy

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Judgment creditors will often place a lien on the judgment debtor’s home as one of the first steps taken to collect the judgment.  In California, the creditor creates the lien by recording an Abstract of Judgment at the county recorder’s office.  Although lawsuits and having a lien placed on your home are serious matters, bankruptcy might help you remove the lien from your home and get rid of the debt.

A bankruptcy discharge acts as a court order voiding the judgment and stopping the creditor from collecting the debt.  However, your attorney must take take additional steps to remove the judgment lien if you qualify.  If you have a judgment against you, be sure to ask your attorney to check for liens against your property.  You might be able to file a motion to avoid or cancel the lien under Section 522(f) of the Bankruptcy Code.

Bankruptcy allows you to protect a certain amount of the equity in your home.  The equity is the difference between the value of your home and the amount of money you owe on the mortgages.  If the judgment lien interferes with your ability to claim your home equity as exempt, you might be able to remove the lien.  Under California law, a homeowner can protect anywhere from $75,000 to $175,000 of the equity in a home from judgment creditors or creditors in a bankruptcy.

Example:  Suppose your home is worth $300,000 and you owe $275,000 on the mortgage.  Let’s also suppose you default on a $30,000 credit card bill and there is a judgment lien on your home.  You can file a motion in bankruptcy court to remove the lien and regain the $25,000 of equity in your home.

If you have a judgment lien against your home and want to learn more about how to remove it in bankruptcy, please feel free to contact us at (619) 448-2129 for a free consultation.

Image credit: Brad_Chaffee

Carl Starrett

Carl Starrett is a consumer bankruptcy attorney in San Diego, California helping debtors file for protection under Chapter 13 and Chapter 7 of the Bankruptcy Code.

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