Q: I have a judgment, possibly a lien on my home from a credit card company. If I decide to file bankruptcy,what happens?
First, check with the Register of Deeds in your county to see whether a lien has been filed against your home. A great deal turns on whether you have a mortgage, as the mortgagee has a lien superior to anything the credit card company may have. If so, check the balance due on the mortgage against the appraised value of your house. New Hampshire has a homestead exemption of $120,000 for a person filing singly and $240,000 for a couple filing jointly.
As I have no solid facts to go on, I can only pose a hypothesis. If your house is valued at $300,000 and your mortgage is $200,000, your equity in the house - the difference between the appraised value and the mortgage - is $100,000. That is less than $120,000 and hence your house cannot be seized by the credit card company. If you file for Chapter 7 bankruptcy (a simple or liquidation bankruptcy), assuming this hypothesis, you will not lose your house. Please remember that even if you don't lose your house, the fact that you filed a bankruptcy petition will remain in your credit history for seven years.
William J. Amann and Timothy Denison agree with this answer
Judgments, when final, generally become liens against the debtor's real estate located in that state.
If a bankruptcy case is filed withn ninety days of the judgment's becoming a lien on the real estate, it may be voided in bankruptcy as a preferential transfer.
If it's too late for that, and you file a Chapter 7 case, you cannot "strip" the lien (the Dewsnup case).
If you file a Ch. 13 case, and there is equity value above the first mortgage balance to any extent, a US Supreme Court Case (thanks, Clarence Thomas) says that the debtor cannot remove the judgment lien.
Otherwise, I agree with my colleague's opinion.
Timothy Denison agrees with this answer
What happens depends upon which chapter bankruptcy you file--most likely 7 or 13 and when you file. Certain liens and judgments can be voided under the Bankruptcy Code, e.g., 11 USC 522 (f). Section 522(f) allows a debtor “to avoid or ‘wipe out’ a valid
perfected lien or interest that a creditor has in particular property.” In re Scannell, 453 B.R. 36, 39 (Bankr. D.N.H. 2011) (citation omitted). The purpose of a motion to avoid lien is “to enhance [a debtor’s] fresh start by eliminating an otherwise valid judicial lien.” Id. at 41 (citing In re W.K. Montgomery, 80 B.R. 385, 387 (Bankr. W.D. Tex. 1987)). “[T]he extent to which a lien may be avoided may be easily computed once four variables are determined: (1) the amount of the lien in question; (2) the sum of all other liens on the property; (3) the amount of the debtor’s exemption; and (4) the value of the subject property.” In re Dore, 1999 BNH 028, 3. See also 11 USC 544.
Do not wait any longer to deal with this; time is of the essence. Get an experienced Bankruptcy attorney right away and he/she will study your specific situation and make the best recommendation for you.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.