Avoiding Liens

In bankruptcy you can often avoid a judgment lien on your home. Typically liens on your home are of two types: consensual, agreed to, or nonconsensual, not agreed to. Most liens are consensual, in other words the lien was agreed and consented to, e.g. a mortgage on the home. Consensual liens are generally not avoidable, except under special circumstances.

A judicial lien, however, is a nonconsensual lien and may be avoided. A judicial lien arises when a judgment is entered against the judgment debtor in favor of the judgment creditor. The judgment creditor then obtains a certified copy of the transcript of judgment from the court. Then, it is recorded in the county records in the county where the debtor owns real estate.

Once recorded, the transcript of judgment places a lien on any real property owned by the judgment debtor in that county for the amount of the judgment. The lien is done without the consent of the homeowner.

In bankruptcy, however, the debtor may avoid the fixing of a judicial lien on the debtor’s interest in property to the extent that such lien impairs the debtor’s exemption in that property to which the debtor would have been entitled if such lien is a judicial lien. A judicial lien impairs an exemption to the extent the lien, all other liens on the property, and the amount of the exemption that the debtor could claim if there were no liens on the property, exceeds the value that the debtor’s interest in the property would have in the absence of any liens.

In Colorado a homeowner is entitled to a $75,000 homestead exemption if under 60, or $105,000 if 60 or over or you or your spouse is disabled. In the case of a judicial lien, the debtor’s bankruptcy attorney determines the extent the judgment lien impairs the homestead exemption. Then, a motion to avoid the judicial lien is filed. I many cases there is insufficient equity in the home and the entire judicial lien is avoided.

The determination and motion would need to be done by an experienced Colorado bankruptcy attorney. With over 30 years of experience call Martin Long at LONG & LONG P.C at 303-832-2655.