Will bankruptcy void these liens? 17 Answers as of November 13, 2014

When I file Chapter 7, the only asset I have is my home. Several people have liens on my home. I am living one state away in my sister’s house. My mother needs 24 hour care and I am renting out my house until I can come home. Will this affect the outcome as well?

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GARCIA & GONZALES, P.C. | Richard N. Gonzales
Yes. You can only void liens on your personal residence, not a rental.
Answer Applies to: Colorado
Replied: 11/13/2014
Barnhart Law Office
Barnhart Law Office | Bruce C Barnhart
The bankruptcy code permits you to avoid certain liens that impair your homestead. If you qualify for the homestead exemption, you can avoid those liens.
Answer Applies to: Nebraska
Replied: 11/13/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
It would have helped to answer your question if you had indicated the type of liens that several people have on your home. Judgment liens, which are imposed when the person obtains a court judgment against you and then records the judgments, can be removed in bankruptcy if these judgments impair your homestead exemption. However, if you don't live in the property, you can't claim a homestead and are unlikely to be able to remove the judgment liens. You may be able to settle these liens for less than full value if you negotiate this properly.
Answer Applies to: Nevada
Replied: 11/12/2014
Fresh Start Law Group
Fresh Start Law Group | Kimberly Cambron
Hi, Yes, judgment liens on real property can be avoided but this is not an automatic process. A motion must be filed to avoid a lien. In order for the lien to be avoided, the lien must 1) impair the debtor's exemption (takes up all or most of the value of the exemption) and 2) be a judicial lien or "non-possessory, non-purchase money security interest". A judicial lien is a court judgment or garnishment. A non-possessory, non-purchase money security interest is usually when someone pledges jewelry or household items as collateral. If you are renting out the house, then you must claim the rental as income on your bankruptcy petition. Also, if you are not living in house as your primary residence, then you would not be able to claim the homestead exemption for the house. The homestead exemption only applies to the house that you are living in when you file for bankruptcy. I hope this helps!
Answer Applies to: Tennessee
Replied: 11/11/2014
The Law Office of Darren Aronow, PC
The Law Office of Darren Aronow, PC | Darren Aronow
You have to file a motion to avoid the liens in addition to the bankruptcy, it is not avoided automatically. And lien avoidance is for primary residence in a chapter 7.
Answer Applies to: New York
Replied: 11/11/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Yes, most likely you will need your "homestead exemption" to avoid judgement liens. Check with a local lawyer who can do the math for you. The issue would be your intent to come back. I won a case like this on appeal, so make sure you get a good lawyer.
    Answer Applies to: California
    Replied: 11/11/2014
    Tokarska Law Center
    Tokarska Law Center | Kathryn U. Tokarska
    It depends on the market value of the property, if mortgages have liens on the property, the amounts of these individual liens. Get a consult from a bankruptcy attorney to discuss more details.
    Answer Applies to: California
    Replied: 11/11/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    You state that "several people have liens on my home." I presume that you have had several different people sue you and get judgments that have become automatic liens against the real estate. If that is true, and you are in fact referring to judgment liens, then yes, you might be able to avoid these judgment liens if they are impairing the equity that you are trying to protect ("exempt") in the property. Your initial question was "will bankruptcy void these liens?" It is not just the bankruptcy, but you will also have to file motions to avoid judicial liens in your bankruptcy case. It doesn't just happen automatically, because you will also have to file those motions as well.
    Answer Applies to: Pennsylvania
    Replied: 11/11/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    This is actually a very complicated legal question, because several legal issues are involved. Your ability to void the liens is dependent upon whether they restrict your use of available exemptions. The available exemptions are unclear because you are living in one state and what you are calling your home is in another state. You must file for bankruptcy in the state in which you have spent the majority of time in the past 6 months, but whether you can use state or federal exemptions and which state's exemptions may apply depend on the laws of each state. Furthermore, liens are not voided automatically by filing bankruptcy. You have to file a separate motion to void those liens with the bankruptcy court, and the trustee or any of the creditors holding those liens would have an opportunity to object to the exemptions you would be claiming in your motion. Therefore, attempting to void those liens may turn out to be much more expensive than the usual cost to file a chapter 7 case. Litigation is always more costly than a routine, uncontested bankruptcy case. You can choose not to void the liens but you are still facing the possibility that the trustee will challenge the homestead exemption you want to claim. The trustee will decide whether to challenge the homestead exemption based on what s/he could realize after selling the home and paying off all the secured creditors. There may not be enough equity to bother with, but if you believe it is worthwhile to attempt to void the liens, that suggests you believe there is some value in it. If you think there is value, the trustee will scrutinize whether s/he could liquidate the home to benefit the creditors.
    Answer Applies to: Oregon
    Replied: 11/10/2014
    Law Office of Andrew Oostdyk
    Law Office of Andrew Oostdyk | Andrew Oostdyk
    This question requires a lot more detail to answer and you would be best served to sit down with a bankruptcy attorney for a consultation. Some liens can be discharged through the Bankruptcy, some cannot. You will need to know the amount of equity in your home, this can affect the lien questions as well as whether the property is exempt. What is the rental agreement? Will that agreement void a homestead exemption for the property? The rental income must be reported in addition to any other income you are earning.
    Answer Applies to: Texas
    Replied: 11/10/2014
    A secured interest lien such as a mortgage or home equity loan will survive the bankruptcy discharge. Where you are living is the venue for the bankruptcy in general? If you have equity in the rented house you may not be able to protect if you are not living there.
    Answer Applies to: Minnesota
    Replied: 11/10/2014
    Benson Law Firm
    Benson Law Firm | David Benson
    The only way a bankruptcy will void a valid lien is if your attorney files a motion to avoid it.
    Answer Applies to: Ohio
    Replied: 11/10/2014
    Depending upon the nature of the lien, a chapter 7 Bankruptcy may discharge a lien placed upon the property by a Judgment Creditor. The Bankruptcy will discharge the underlying Judgment, but does not automatically remove the Judgment Lien, it requires the filing of a motion to avoid the lien if it impairs the equity claimed by the homestead exemption. Any type of lien placed on the property with your consent such as a deed of trust or mortgage is not discharged in a Chapter 7 Bankruptcy. Further, in order to claim the homestead exemption you must be actually living in the home, otherwise you can only claim the amount of the exemption provided in under Code of Civil Procedure Section 703.140(b) which limits the amount of interest in any real property to $25,575.00.
    Answer Applies to: California
    Replied: 11/10/2014
    The Law Offices of Deborah Ann Stencel | Deborah A. Stencel
    It depends on the type of liens, the value of the home, the exemptions available in bankruptcy. The fact that you are renting out the house may have an impact on the exemptions available. A quick chat with a bankruptcy attorney will clear this up for you.
    Answer Applies to: Wisconsin
    Replied: 11/10/2014
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    Voluntary liens on your home, such as from mortgages, cannot usually be eliminated in a Chapter 7 bankruptcy case. Involuntary liens, such as liens created by recording judgments and such may be removed if they encroach on your exemption. The amount of your exemption varies depending on your age, income and whether you are disabled. If creditors already have involuntary liens against your property, you would need to file a particular motion within the Chapter 7 case to eliminate them or they remain. Although many brave people file their own petitions, especially when you have involuntary liens against your property, you should retain competent counsel to represent you.
    Answer Applies to: California
    Replied: 11/10/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Chapter 7 does not affect any liens which were filed before the bankruptcy.
    Answer Applies to: Ohio
    Replied: 11/10/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Generally not, they are secured creditors. Your mother's situation is not relevant either.
    Answer Applies to: Michigan
    Replied: 11/10/2014
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