You are entitled to avoid judgment lien(s) “JL” during bankruptcy, when the JL impairs your exemptions you would otherwise be entitled to claim, even when there is no equity in the property for you, you may still claim the exemption and eliminate the JL on your property.
If you fail to make a motion to avoid the JL, the JL will survive the bankruptcy discharge order and you will need to make room in your ‘fresh start’ budget to pay this debt.
A separate motion is required for each JL the debtor wants to avoid.
This relief is available whether you file a chapter 13 or chapter 7.
If the fair market value of your home is less than the total of your secured mortgages and homestead exemption, then you may ask the court to avoid a judicial lien.
A chapter 7, after you file the motion to avoid the JL, changes the JL from a secured claim to an unsecured non priority claim and includes the JL in the Chapter 7 Discharge Order.
A chapter 13, after you file the motion to avoid the JL, the Chapter 13 Trustee pays the JL Claim the same percentage as the rest of the general unsecured claims and the Court changes the character of the JL from secured to unsecured after you have made all of the required chapter 13 plan payments.
In a Chapter 7: We suggest you file a copy of the Court’s Order Avoiding the Lien with the County Recorder’s Office in case the creditor is slow to file its Lien Release.
In a Chapter 13: We suggest you file a copy of the Court’s Order Avoiding the Lien. Generally the Judgment Creditor will file a Satisfaction of Judgment shortly after your Discharge Order is entered, however, if the Creditor fails to do so, you may file a copy of the Chapter 13 Discharge Order.
In a chapter 13 case the motion is filed on the Petition Date.
In a chapter 7 case the motion is filed any time between the Petition Date and before the Discharge Order is entered.
The burden of proof of the value of the home, the amount of secured liens and the existence of the judicial lien is on you.
It takes at least 30 days from filing; to obtain an order avoiding the lien unless the creditor opposes the motion, then it can take longer. Due process gives the creditor time to receive, review and oppose the motion.
Postage and copy: In some cases the copy and postage costs can be $200 - $300 or more, it depends on the number of pages of the exhibits and motions and the manner of service and the number of parties required to be served.
Attorney Fees: The court approved attorney fees for a Motion to Avoid (if uncontested) is $750. If the creditor contests the motion then the costs will increase proportionally to the additional services required. Our hourly fees are $350.
Appraisal: You pay the appraiser directly; appraisal costs vary, depending on the property.
