When unsecured creditors (i.e. credit card company, medical provider) file a lawsuit and receive a judgment against you, they can file a lien or a “Writ of Fieri Facias” on your real and personal properties. If you own a house, the judgment creditor can file a lien specifically on your house. Once the lien is filed, that unsecured debt changes status and becomes a secured debt. This means that your once credit card debt will be treated like a mortgage or a home equity loan. This is very significant when you file a bankruptcy case. If you ignore this lien and treat the debt as an unsecured debt under your bankruptcy case, the debt may be discharged but the judgment lien will survive the bankruptcy discharge. This means that once you receive a discharge and complete your bankruptcy case, the judgment lien will still be valid on your property and will have to be paid. It is very important to let your attorney know that you have a judgment against you and to check for any liens on your properties.
If there is a judgment lien, your attorney should file a “Motion to Avoid Lien” in a Chapter 7 bankruptcy case or avoid the lien in a Chapter 13 Plan, in order to make sure that the judgment lien and the debt is fully discharged at the end of your case. if your bankruptcy case is already discharged and completed and a judgment lien was not avoided, there may still be ways to avoid the lien now.
Contact the experienced bankruptcy attorneys at Hong & Sessions Law, LLC to learn more.