L is for Lien Avoidance in Bankruptcy
L is for lien avoidance actions in Bankruptcy Court. In order to truly get a fresh start after bankruptcy, it's best to get rid of all judgment liens. Last week, I discussed "judgments" in the bankruptcy alphabet. There, I talked about the need to file a "suggestion of bankruptcy" in any pending civil cases in which you are a defendant.
So, what happens if there's already been a judgment filed? As you're aware, that judgment may later hamper your ability to get credit, because a prospective mortgage or car lender will want that judgment removed from your credit report before approving your loan.
Thus, it's important to use the tools provided by bankruptcy law to remove that judgment. During your case, you'll want to file a motion to avoid judgment lien on the basis that the lien is "impairing an exemption" in property that you own and that you wish to protect.
I'll show you an example: let's say that Discover Card got a judgment against you last year for $6,500. You file a Chapter 7 case now and during the four months of your Chapter 7 case, your attorney should file a "motion to avoid lien" against Discover. That motion is in the form of a 2 to 3 page document filed with the Bankruptcy Court. It will explain that Discover's lien is impairing (reducing) the amount of equity that you have in your property (usually your house). Section 522 of the Bankruptcy Code gives you the right to have the Bankruptcy Court eliminate that judgment lien.
If you don't have any equity in your property, don't worry. You're still able to get rid of the judgment lien.
Unfortunately, you won't be able to avoid IRS secured tax liens or other liens, such as sewage liens, but nevertheless, judgment lien avoidance actions are extremely common and useful in Bankruptcy Court. It's a great way to rebuild your credit as well!
Here's more in the Bankruptcy Alphabet:
Lien Avoidence in Bankruptcy from Pittsburgh Bankruptcy Attorney, Shawn N. Wright at http://www.pittsburgh-bankruptcy-law.com/blog/bid/121987/L-is-for-Lien-Avoidance-in-Bankruptcy
Lie, the Big Mortgage Industry from St. Clairs Shores MI Bankruptcy Attorney, Kurt OKeffe at http://www.michiganmortgageattorney.com/mortgage-modifications-big-lie/
Lien from New York Bankruptcy Attorney, Jay S. Fleischman at http://www.consumerhelpcentral.com/bankruptcy-alphabet-lien/
Lien Stripping from Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell at http://bankruptcyblog.caldwell-lawfirm.com/2011/11/14/bankruptcy-alphabet-l-is-for-lien-stripping.aspx
Lift the Stay from Marin County Bankruptcy Attorney, Catherine Eranthe at http://marin-bankruptcy-law.com/407/bankruptcy-a-to-z-l-is-for-lift-the-stay/
Luxuries from Colorado Springs Bankruptcy Attorney, Bob Doig at http://springsbankruptcylaw.com/colorado-springs-bankruptcy-abcs-l-for-luxuries/
Long Term Payments, Chapter 13 Plans from Philadelphia Suburban Bankruptcy Attorney, Chris Carr at http://christophercarrlaw.wordpress.com/2012/02/04/long-term-payments-chapter-13-plans/
Liquidated from Metro Richland Consumer and Bankruptcy Attorney, Mitchell Goldstein at http://www.morethanbankruptcy.com/bankruptcy-a-z-l-is-for-liquidated.html
Lien Stripping from Honolulu Bankruptcy Attorney, Stuart T. Ing at http://www.bankruptcyhi.com/2012/01/l-is-for-lien-stripping/
List It Or Lose It from Allen Park, Michigan Bankruptcy Attorney, Christopher McAvoy at http://downriverbankruptcy.com/stands-list-lose/#axzz208umE7D3
Life Insurance from Cleveland Area Bankruptcy Attorney, Bill Balena at http://ohiobankruptcysource.com/l-for-life-insurance/
Life After Bankruptcy from San Francisco Bankruptcy Attorney, Jenna Cho at http://www.jclawgroup.com/blog/bankruptcy-alphabet-l-is-for-life/
L: Listing Assets and Debts in Bankruptcy from Los ANgeles Bankruptcy Attorney, Maruk J. Markus at http://www.bklaw.com/bankruptcy-blog/2012/02/l-listing-debts-and-assets-in-bankruptcy/
Lawyer from Wisconsin Bankruptcy Attorney, Bret Nason at http://nasonlawfirm.com/archives/786
Limits of Bankruptcy from Livonia Michigan Bankruptcy Attorney, Peter Behrmann at http://www.livoniamichiganbankruptcy.com/l-is-for-limits-of-bankruptcy/
L is for Levy from Lakewood California Bankruptcy Attorney, Christine A. Wilson at http://www.losangelesbankruptcylawmonitor.com/2012/07/articles/bankruptcy-law-overview/bankruptcy-alphabet/l-is-for-levy/