Each year thousands of people and businesses in Oklahoma file bankruptcy. Avoiding Liens in Bankruptcy. This year, with the advent of the pandemic, more of us have felt the financial strain. From stay at home orders to quarantining many face financial difficulty made harder by the events of 2020. When you turn to bankruptcy, you should also think about getting rid of judgment liens.
As a general rule, judgment liens pass through bankruptcy unaffected by the discharge. In other words, a bankruptcy discharge eliminates only the personal liability of a debtor but the lien remains attached to the property. However some liens are avoidable in bankruptcy. Specifically, a lien that is attached to an asset which the debtor can claim as exempt can be avoided to the extent the lien impairs the value of the asset.
Judgment Liens in an Oklahoma Bankruptcy.
Liens are created when a creditor obtains a security interest in your property. Meaning if you do not pay that creditor, they can foreclose on the lien and force the sale of the property to which the lien is attached. A judgment lien is created when someone wins a lawsuit against you and records the judgment against your property.
Types of Avoidable Liens
There are two types of liens avoidable in a Chapter 7 bankruptcy. First is a judicial lien like a judgment or garnishment. The second is a non-possessory, non purchase money security interest in household goods and tools of the trade.
To determine if a judicial lien is avoidable, you must first determine whether the lien impairs one of the debtor’s exemptions. An exemption is generally a right codified by statute in specific property. For example, in Oklahoma a person’s principal residence is exempt from forced sale. Therefore any non purchase money judgment attached to a person’s home as a lien would be avoidable.
Avoiding Liens in Bankruptcy.
To avoid a lien in bankruptcy, a debtor simply files a motion to avoid the lien and shows the Court that the lien impairs a piece of property that the debtor claims as exempt. After reviewing the motion the court would likely award the relief sought and remove the lien from the property by ordering the lien holder to release the lien.
Contact A Tulsa Bankruptcy Lawyer For Help.
Bankruptcy doesn’t have to be so difficult. The road it takes to there is is stressful enough without a complicated bankruptcy. The key to filing bankruptcy is paperwork. Our Tulsa bankruptcy lawyers can help. We’ve filed thousands of cases throughout the state and we can do the same for you. Call today and get a free consultation at 918.743.2233 in every county in the State.