30 Sep How Does a Court Judgment Affect my Real Estate and What can I Do about It?
If a creditor sues you and obtains a court judgment for an outstanding debt, it most states (including here in Massachusetts) they then have the right to obtain an “execution” on the judgment. This execution can be recorded at a registry of deeds to create judicial lien on real estate.
This lien gives the creditor the right to collect the amount of the judgment from the proceeds of a sale of the property. Whether they can force a sale of the property to obtain these proceeds depends on a few things, notably whether an exemption available. In Massachusetts we have a generous exemption for properly and timely-recorded homestead declarations.
People often file bankruptcy when they have an execution lien put on their property. The reason for this is that this type of lien can usually be avoided in bankruptcy. Upon filing of the bankruptcy petition, a debtor’s attorney will usually file a motion to avoid the execution lien. The Bankruptcy Court will grant this motion so long as the debtor can exempt the value of the attached property.
Nicholas Ortiz, Boston Bankruptcy Attorney
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