Will a Bankruptcy Discharge a Lien on My House

              Most of the people that I meet with at Halcomb Singler, LLP, have waiting until things have gotten fairly bad to meet with me about potentially filing bankruptcy.  It is not uncommon that a potential client has a few judgments against them at the time I meet with them.  Often, a potential client has been motivated to contact my office because one of the judgment creditors is about to garnish his or her wages.  It is important for a bankruptcy attorney to identify when there are liens on a person's house because filing bankruptcy alone will not discharge the lien.

            For example, lets say Suze gets sued by American Slow in Hamilton County, Indiana.  Suze knows she owes American Slow, but cannot afford to pay them and just ignores the lawsuit  Suze also owns a home in Hamilton County, Indiana.  Suze owns this house in her name alone.  What Suze may not know is that once American Slow obtained a judgment against her in the same county in which she owns real estate that judgment became a lien on the real estate.  What this means to Suze is that Suze cannot sell the house without paying off the lien.

           What Suze likely doesn't know is that if she files for bankruptcy and gets a discharge that the lien stays on the house.  No one can sue Suze for the lien personally, but the bottom line is that Suze will have to pay the lien prior to selling her house, even if it is 5 years after she has received her bankruptcy discharge.  AND there is no reason (unless Suze is a licensed attorney in Indiana handling bankruptcy cases) that Suze would know this.  So, what is the point of filing bankruptcy if the lien survives?

           In many cases a judicial lien can be avoided in bankruptcy.  When a lien is avoided it means that it is no longer attached to the real estate and that when Suze goes to sell the house at some point down the road that she will not have to pay off the lien in order to sell the house.  In order to avoid a lien in Chapter 7 or Chapter 13 bankruptcy, a bankruptcy debtor must file a motion in compliance with 11 U.S.C. 522(f).  It is important to note that not all liens can be avoided in a bankruptcy.  This is why it is important to meet with a bankruptcy attorney to go over whether filing bankruptcy would be beneficial in your situation.  While I am sure there is someone out there who has successfully filed a motion to avoid a judicial lien in bankruptcy, my guess is that there are thousands more who went through bankruptcy without an attorney and have no idea that when they sell their home that there will a lien to pay off.

         If you are a resident of Marion, Hamilton, Tipton, Boone, Madison or Hancock county, Indiana and would like to meet with me regarding whether bankruptcy is an option for you please feel free to give me a call.  The telephone number is (317) 575-8222.  Or, you can click here and our office will contact you regarding an appointment.  There is no fee for the initial consultation and if you do decide to  file bankruptcy our fees are flat fees that can be paid in installments.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.