Expert: Mark J. Markus- California Bankruptcy Attorney - 10/11/2009

Question
after reading some bk forums i am totally confused about the proper way to remove/vacate a lien after bk..i understand it is not included in the normal bk..so please..if i am filing bk and already have a judgement/lien at local courthouse..how do i make sure it is included in my bk to have it effortlessly removed post bk? i called local courthouse and clerk just told me to make sure they get a copy sent to THEM from bk court at time of filing showing creditor/lien holder included in bk..she then said it wouldnt cost anything except 10 dollar filing fee..is there more to it? thanks in advance

Answer
I think you're mixing up a couple of different concepts here.  A judgment and a lien are two different things.  A judgment is merely a court order to pay (or do) something, giving the ability to obtain a lien against certain assets (such as real estate, or wage garnishment, etc.).

A lien creates security interest in a particular asset, giving the judgment creditor the rights to equity in that asset, if there is any (and subject to any senior liens, such as mortgages, or earlier recorded judgment liens).

If you receive a discharge in a bankruptcy case, and the underyling debt you are referring to is dischargeable, then you no longer owe on that debt.  However, if there was a lien perfected against assets more than 90 days prior to your bankruptcy case being filed, then that lien remains against whatever assets it attached to before your bankruptcy case was filed.  Usually this is real estate, if the creditor simply recorded an abstract of judgment in the county where property is located.

A lien can be removed in a bankruptcy case if it meets certain criteria; specifically if it impairs an exemption that the debtor in bankruptcy would be entitled to in absence of the lien.  This of course depends on what exemption laws apply in your particular case, the value of the asset(s) in question, and amounts of any senior liens against that asset.   If you meet the criteria, you can seek to reopen your bankruptcy case to file a motion to avoid the lien.

You definitely need to employ an attorney in the location where the bankruptcy case was filed to analyze your situation and advise further.

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