Liens Survive The Bankruptcy Discharge
By Cathy Moran, California bankruptcy lawyer on Jan 30, 2007 in Debts Not Dischargeable
One of the basic concepts in bankruptcy is that a lien ( the legal interest of a creditor in a particular asset) passes through the bankruptcy proceeding unchanged, unless the judge makes an order otherwise.
The bankruptcy discharge eliminates the personal liabibility of the person who filed bankruptcy. After the bankruptcy discharge, the creditor with a lien can exercise its rights against the asset which is subject to the lien, but cannot sue the debtor to reach any other item of the debtor’s property or wages, even if the liened asset is worth less than the face amount of the debt.
For example, a lender who loaned the debtor money to buy a car retains its lien on the car after the case closes, and can repossess the car, but nothing more, post bankruptcy. If a judgment creditor has an enforceable lien in the debtor’s assets, that lien survives the bankruptcy in the property to which it attached before the bankruptcy, but does not attach to assets the debtor acquires after bankruptcy.
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