31 Aug Judgments and Liens — Different, Depending on Where you Live
A client told me yesterday he had been researching on the internet over the weekend and had learned that “judgments cannot be discharged”, and so “why is it worth doing a bankruptcy?” He was concerned because a big part of his problem is liens placed on his house and he wants to sell it and relocate. I asked him to send me a link to what he had found because, at least in my state of New Mexico, judgments can practically always be discharged in a chapter 7. (There are some exceptions – you’ll need to discuss them with your lawyer.)
It turned out, not surprisingly, that the language used in the article he had found was confusing — even I had to read it more than once — and it had, indeed, left him confused. Thankfully, he had checked it out with me and we continue preparing his papers for filing.
First comment — be careful about believing everything you find on the internet! Use critical thinking skills!
My post is itself an example of this. The law is different in different places, and how things work in practice differs in different places. This is one of those areas where it’s especially important to talk with an attorney knowledgeable about bankruptcy.
Second comment — just identifying judgments and any related liens by listing them in your bankruptcy papers does not necessarily solve your problem — it does if you are surrendering the property, but not if you want to keep or manage or sell the property yourself. The lien remains of record until it is specifically removed, and removal does not automatically happen. It will take extra steps, how many extra depending on the creditor and how many hoops they want to make the debtor jump through.
Other posts give you more to think about when thinking about judgments and liens: Jonathan Ginsberg, Atlanta Bankruptcy Attorney recently wrote What Does It Mean to Have Judgment Filed Against You?, and Susanne Robicsek, North Carolina Bankruptcy Attorney wrote Bankruptcy Has Many Points Including Dealing With Judgments. Both posts give needed background to this issue.
Gini Nelson is a Santa Fe, New Mexico bankruptcy lawyer who helps people file (or avoid) chapter 7 bankruptcy.
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