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Removing Judgement Liens


  

A judgement lien is an order of the court that has been turned into a debit against, your property. In Colorado, when creditors get judgments they can file the judgement with the clerk and recorder of the county where you live. Creditors cannot force a sale of your home in Colorado owing to an unpaid judgement lien. It just sits there until the home is sold or refinanced, at which point the debt must be paid from proceeds.

Filing Bankruptcy Itself Does Not Remove Judgement Liens- It is Not Automatic

This is because bankruptcy generally wipes out debts, but does not wipe out secured loans and liens on property. For example, if you want to keep a home or car after filing bankruptcy you must pay on those debts in order to keep the property.

Why Can a Judgement Lien Nevertheless Be “Avoided” in Bankruptcy?

The Bankruptcy Code allows petitioners to get rid of judgement liens because the underlying debt is now gone because of the bankruptcy filing, and because the Courts have decided that peoples’ homestead exemptions should come before creditors rights to collect on debt. It makes little sense to have a $75,000 homestead exemption in Colorado if a judgement lien can nevertheless cause creditors to eat into that amount when you sell a home.

Again, this requires a motion and an extra step in the filing of your bankruptcy case.

What Requirements Are There to Remove a Judgement Lien?

11 U.S.C. 522(f) contains the requirements for avoiding judgement liens. The lien must be a “judicial lien,” one that a court placed on your property for owing money and not one that you took on voluntarily, like a second mortgage or car loan. The lien must “impair” an exemption that you are otherwise entitled to, which means that you cannot have more equity in the home than the exemption amount. The lien also cannot be for child support or alimony, those types of liens cannot be jettisoned by a Sec. 522(f) motion. Removing judgement liens is something a qualified bankruptcy lawyer can help you with. Again, it’s not automatic, your lawyer must file a motion to get rid of your judgement liens.