If you have been sued prior to filing bankruptcy, then you may have a judicial lien filed against you in the county in which you reside. A judicial lien is created when a party records a judgment in probate court after winning a lawsuit. If the judgment is recorded in the county where the losing party resides then there is a judicial lien placed on non-exempt property owned by the party (i.e., real estate, personal property, etc.). The judicial lien can attach to current or future property owned if it remains outstanding. Please see our blog post here, to learn more about a judicial lien.
When you file bankruptcy, it is very important for you to let your attorney know whether you have been sued in the past or whether you have a current outstanding judicial lien. You can find out if you have a judicial lien filed under your name by visiting your county probate office. It is important for you to check for judicial liens under all aliases as well.
Motion to Avoid a Judicial Lien
If your attorney is aware of the judicial lien(s) and you do not have any non-exempt equity in property to secure the liens, your attorney can file a motion to avoid a judicial lien to prevent the judicial lien from affecting you in the future after the debt was discharge in your bankruptcy. If granted, the effect of a motion to avoid a judicial lien is that the lien will be avoided to the extent that it impairs exemptions you are allowed under Alabama law (homestead, personal property, etc.).
I always encourage my clients to get an official copy of the motion to avoid a judicial lien, the order granting such motion and their discharge order from the bankruptcy clerk’s office and file them in probate court. In Montgomery County, an official copy is required before the documents can be filed in in the Records & Recording department of the probate court. This will put all parties on notice that the particular judicial lien was avoided by the bankruptcy court.
It is important for you to understand that the bankruptcy court can only avoid the judicial lien up to the point you do not have equity in property. If you have any equity in property then your bankruptcy attorney will discuss how to address that equity in your bankruptcy. If you file a chapter 13, you should be able to pay the value of the equity that cannot be avoided through your plan with interest. If you filed chapter 7, then you will have to pay directly to the creditor the value of the equity plus interest to avoid the creditor from pursuing your property in the future for the amount that could not be avoided.
Discovering a Judicial Lien After Receiving a Discharge?
The lien survived your bankruptcy and you should contact your bankruptcy attorney to find out how to reopen your bankruptcy case so that a motion to avoid a judicial lien can be filed against that judicial lien. To reopen your bankruptcy case, the court will charge you a reopen fee.
If you have discovered judicial liens have been filed against you and want to know your bankruptcy options, please give your local Bond and Botes office a call. One of our experienced attorneys will be glad to provide a free consultation to discuss your financial solutions.