Introduction to Removing a Judgment Lien
At Tran Bankruptcy Law, we have ran into numerous situations where a creditor files a lawsuit, obtains a judgment and puts a judgment lien on a client’s home. Moreover a number of clients have come to us after they already filed bankruptcy and received a discharge stating that the lien was not removed after filing bankruptcy with their previous attorney.
First, there are options. Second, there may be a reason the lien was not removed during the bankruptcy filing at no fault of the previous attorney.
How do I remove a judgment lien
As you are aware, from the title of this article, a judgment lien is the same as a judicial lien. You can remove or avoid these liens in both Chapter 7 and Chapter 13 bankruptcy. However, filing a bankruptcy or receiving a discharge does not automatically remove the lien. A bankruptcy filer must take further action. The debtor must file a motion with the court to remove the lien.
Under the bankruptcy code, the debtor can remove a judgment lien if the lien “impairs the debtor’s exemption.” Simply put, the lien can be removed if there is no remaining equity after taking all available exemptions in the bankruptcy. For example, the lien can be avoided in the following scenario. 1) The home is worth $300k. 2) All mortgages add up to $280k. 3) The Debtor has at least $20k to exempt on the home. In this scenario there is no unexempt equity in the home. Therefore, we can remove the lien.
If there is remaining equity than you might be able to remove a portion of the lien. If the equity is greater then the lien amount, then you wont be able to remove the lien at all.
Can I remove a judgment lien after my case is complete?
Yes. After a case is complete, the debtor can file a Motion to Reopen a case in order to remove the judgment lien.
How do I value a home to remove a judgment lien?
The value of the home in a Motion to Avoid Judgment Lien is taken from the date the bankruptcy was filed. An appraisal is strong evidence of the value of a home. If an appraisal was not done at the time of the bankruptcy filing, professional appraisers have the ability to provide retrospective valuations.
What documents and evidence do I need to remove a judgment lien?
Along with an appraisal most Judges and Courts will require the Debtor to provide a Grant Deed, Deeds of Trust, a mortgage statement, and Declarations from the Debtor and Appraiser.