Will I eliminate all of my debts when I file bankruptcy?

Generally, yes. Bankruptcy is a court process that can wipe out your debt and put you on the path to financial freedom. However, bankruptcy only discharges a debtor’s personal liability on the debt. Bankruptcy does not eliminate liens—notices that a creditor can attach to your property to proclaim to the world that you owe them money. These liens can be a real headache because they will prevent you from selling the property without paying the debt.

There are different types of liens, but a judicial lien is the kind that we are primarily concerned with in bankruptcy. A judicial lien occurs when a creditor files suit against you and obtains a judgment. The lien is then indexed in the court docket. 

Avoiding Liens Is a Crucial Step in the Bankruptcy Process

As part of the bankruptcy process, an experienced bankruptcy attorney will help you take additional steps to avoid liens. Following are two conditions under which you can avoid liens in bankruptcy court:

  • If you have a house, the lien may be avoided based on a calculation that takes into consideration the value of the property, the amount of any secured loans, the amount of the available exemptions, and the lien attached to the property.
  • If a judgment is obtained against you within 90 days prior to the filing date of your bankruptcy, then the lien can be avoided. 

Lien avoidance can be the key to any fresh start, and it is important to tell your bankruptcy attorney about any outstanding judicial liens that you know of so that he can assess the impact on your specific situation.

Hiring a Bankruptcy Attorney May Be the Smartest Money You Ever Spent

Are you looking for help with your bankruptcy case? Attorney Rodney Shepherd has helped countless people eliminate debt and avoid liens. Contact him today at the number at the top of this page or fill out his handy contact form to learn how he can help you.