Bankruptcy can prevent future judgment liens. It usually stops a lawsuit from turning into a judgment, and then a judgment lien on your home.
Our last blog post was about how filing bankruptcy can sometimes remove, or “avoid,” a judgment lien from your home. This is a great potential benefit of bankruptcy if a judgment lien has already been recorded.
...Bankruptcy can, in the right circumstances, remove a judgment lien from the title to your home. Here are the conditions for pulling this off.
Do you have a judgment lien on your home? If so, the debt on that judgment is secured by whatever equity you have in your home. The debt is encumbering the title to your home, eating up your equity.
...Bankruptcy usually does not get rid of liens against your assets. However, in many situations you can “avoid” a judgment lien on your home.
We’re on a series of blog posts about the powerful but less obvious benefits of bankruptcy. Bankruptcy can do much more than just give you immediate and long-term relief from your debts. Today we get into the extremely helpful way bankruptcy can take judgment liens off the title to your home.
...Bankruptcy can do more than forever discharge your debts. It can undo some bad creditor actions, like a recorded judgment lien on your home.
If a creditor has sued and gotten a judgment against you, it likely now also has a judgment lien against your home. In our last blog post a couple of days ago, we got into how dangerous judgment liens can be. We also explained how you may have a judgment lien on your home and not even know it. Given how dangerous they can be, it’s good that bankruptcy often can destroy judgment liens.
...Creditors sometimes have good reasons to ask for permission to finish resolving an ongoing dispute outside of bankruptcy court.
In our last blog post we talked about the possibility of creditors asking for “relief from the automatic stay.” This phrase refers to a creditor asking the bankruptcy court for permission to pursue a debt or claim in spite of your bankruptcy filing. The “automatic stay” stops creditors from taking collection action against you immediately upon your bankruptcy filing. In certain limited circumstances a creditor may have legal grounds to ask for an exception to be made to that automatic stay protection.
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