One of the primary purposes of personal bankruptcy is to give you a fresh start. If you own a home and have already been sued by one of your creditors, your fresh start could be hampered. When a creditor wins judgment in a lawsuit, you can almost be positive he will file a transcript of judgment with the county clerk. What this means is that he will have a lien against any real estate you own. Before you can sell your real estate, you will have to settle with the creditor for the amount of the lien.
When you file bankruptcy, you should tell your bankruptcy attorney about any judgments that creditors have gotten against you and ask her to file a Motion to Avoid Judgment Lien. Some bankruptcy attorneys do this automatically and some do not.
What happens if a judgment lien is not avoided in bankruptcy? The lien will remain in place, and you will still have to settle with the creditor when you try to sell your home, even though the underlying debt by which the creditor was able to file the lien will be eliminated by the bankruptcy.
Generally speaking, you should be able to ask the bankruptcy court to reopen the case so that you can file a Motion to Avoid Judgment Lien. Of course, there may be additional court costs and attorneys fees, which is why you should make sure your attorney files the motion when she originally files your case.
If you have questions about how to get rid of a judgment lien after your bankruptcy case has been closed, please give us a call at 303.331.3403.