Legal Question in Bankruptcy in New York

Re: judgement attached to my home

When a judgment is obtained against you, the judgment becomes a lien against your real property once the judgment is filed with the county clerk. If you file for Chapter 7 bankruptcy, your personal liability for the judgment is disharged. The lien remains on the property, however, and will eventually be paid if you sell or refinance. Liens are good for 10 years and can be renewed for another 10 years. However, under two circumstances you can void the lien. First, if you file for bankruptcy within 90 days of the judgment lien having been filed, it can be voided. Second, and more complicated, if the judgment lien "impairs" your homestead exemption, a special proceeding can be brought to void the lien. The homestead exemption in New York is $50,000. The exmemption applies to the equity in your property. Essentially, if you have less than $50,000 in equity, you would be able to void the judgment lien. However, the specifics of your situation will affect what would happen in your case. Please contact my office directly if you would like to discuss further.

Re: judgement attached to my home

Chapter 7 will discharge the debts that underlie the judgments, assuming the debts are properly listed, the creditors are not "purchase money lenders" (lenders who lent you money to buy a particular big-ticket item like a house or a car, and who hold a secured interest in your house or car) and the case is discharged, but the judgments themselves will remain in effect unless your lawyer makes a motion to avert them. Judgments will very likely stay in effect if they are held by your mortgage company or home equity lender, too, since these are "purchase-money lenders," who are creditors on steroids.

There is state law in place in NY that requires the state court in NY to avert (get rid of) judgments for which the underlying debt has been discharged in bankruptcy if one year (or more) has passed since the bankruptcy discharge was granted. A creditor collecting on those judgments in the meantime would violate the bankruptcy court's discharge order.

However, the judgments cloud the title to your house; if you sell before they are judicially averted you'll have to pay them off with proceeds from the sale.

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.

Re: judgement attached to my home

This is an interesting and good question on a complex issue.

1. I would look to the NY State General Obligations Law which controls the exemptions in NYS under the Bankruptcy Code.

The 'Homestead Exemption' would lower the mortgages by approximately 15 thousand (my number is likely wrong - this is something to look up and to never trust to memory).

2. other obligations (debts) would be classified a 'in personem' or in 'res'. That means that any debt incurred directly on the house (capital improvement) would stay on the house. But any debt unrelated to the house, even if the creditor put a lien on the house, would be 'discharged' under the Bankruptcy Discharge and be uncollectable.

Since such a lien is a device to further collection, the lien must be released.

So, yes; consumer debts (credit card, etc) and similar debts would be discharged. But a debt to a man who fixed your roof and put a lien on the house would still be on the house and you could not sell the house without paying that debt.

Of course, these liens must be regularly renewed or they lapse and dissolve.