Legal Question in Bankruptcy in California
Remove liens to achieve refinance
I had a business for 15 years that went under. I walked away with nothing, no savings or IRA or retirement. Only my house, on which I now have two liens. I need to refinance to lower my mortgage. I cannot, without paying the creditors. My credit cards were used for the business, not vacations or anything personal. so I am not in moral dillema about not wishing to pay creditors. still, i wish to refi. how can this be done without paying them? Someone told me i could declare bancruptcy, have the liens removed, do the refi, then cancel the bancruptcy. Is this true? Is this wrong? Are there other solutions that still do not involve paying the credit cards? I am truly looking for a new start, and have done my best to be straight. Look forward to some straight advice, albeit peerhaps unorthodox. Thank you.
2 Answers from Attorneys
Re: Remove liens to achieve refinance
You are probably out of luck and you have been misinformed by your friend. There is a procedure to remove judgment liens in bankruptcy, but you can only remove the liens if they impair your homestead exemption. If you have $200,000 in equity and $40,000 in judgment liens, bankruptcy will not remove the liens from your home. And you cannot simply dismiss your bankruptcy one the court has ordered removal of the liens. You must see the case through to the end.
For more information, consult a local bankruptcy attorney.
Re: Remove liens to achieve refinance
It is possible, in bankruptcy, to set aside liens, depending upon the circumstances. There is no other lawful means of accomplishing your goal, if the liens are valid. I do not understand why you make a distinction about debt deriving from business obligations and not personal and that thus, there is no "moral dilemma"; you owed the debt, whether or it was incurred via business goals or personal goals; you "personally" received the benefits, as well as the burdens from your business, assuming you were not a corporation with multiple shareholders, etc.
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