You may be considering filing bankruptcy because one of your creditors has obtained a judgment against you. Most people are uncertain of the consequences that a judgment can have. Usually, if you do not own any real property (house or land) or if you do not have any equity in your property, it can be difficult for the judgment creditor to satisfy the judgment. In other words, if you do not own any property with value, it can be difficult for the creditor to receive money or property from you to pay off the judgment.
On the other hand, you may need to be concerned about a judicial lien. If you own real property in the same county where the judgment was entered by the court, then the creditor automatically has a lien against your real property. This means that when you try to sell your house, you will have to pay off the judgment before you can sell the house.
To better explain how a judgment lien works, here is a common situation:
You owe $25,000.00 on a credit card and have fallen behind on the payments. You first receive a Civil Summons from the attorney representing the credit card company. They give you 30 days respond, and when no response is received from you, the credit card company obtains a Judgment from the court. The lawsuit was filed in Guilford County, which is where your home is located. Ten years later, you try to sell your home. You are unable to do so without first paying off the $25,000.00 judgment (plus interest and attorney fees).
The good news is that bankruptcy can essentially eliminate the judgment lien on your home. If you own a home and a creditor has obtained a judgment against you, ask your bankruptcy attorney about filing a Motion to Avoid a Judicial Lien. In the appropriate situations, your attorney can file a motion with the bankruptcy court requesting that the judicial lien be removed from your home upon completion of your bankruptcy. If the bankruptcy court grants the motion, then the judgment creditor will no longer have a lien on your house. You also need to ensure that the judgment debt is listed on your actual bankruptcy petition in order for the debt to be eliminated.
Although your bankruptcy attorney will charge an additional fee to file the Motion to Avoid a Judicial Lien, it is well worth the attorney fee to eliminate thousands of dollars in additional liens on your home. For further information on whether a Motion to Avoid a Judicial Lien will be best in your situation, contact your bankruptcy lawyer.