If my home has a lien against it from a creditor; will bankruptsy remove it?
3 Answers from Attorneys
Yes, probably so. I can't say for sure because it depends on how much equity you have in your house and how much other property you have when you file (it's a very long mathematical computation) but I would estimate that the lien can be removed in around 90-95% of cases.
I have read Mr. Polks answer to the question. It is incorrect 98% of the time.
In a Chapter 7 case, the entry of a Chapter 7 discharge order will never have the effect of removing any valid lien (either a first or second lien) against a homestead (or any other property for that matter). In a Chapter 7 case, all valid liens survive bankruptcy and will remain intact after the discharge order is entered. No exceptions.
In a Chapter 13 case, you will also never be able to remove a valid lien against a homestead. The only exception is a second lien in a situation where both the first and second lienholder have no equity.
First Lien payoff: $99,000
Second Lien payoff: $20,000
Value of Home: $100,000
Result: The second lien can be completely stripped always in a Chapter 13 case, but the value of the home is subject to debate and decision by the court.
First Lien payoff: $100,000
Second Lien payoff: $20,000
Value of Home: $ 99,000
Result: The second lien can not be stripped away and must be paid in full.
See the Fifth Circuit Court of Appeals decision in Bartee, 212 F.3d 277 (5th Cir. 2000) if you want to pursue further research.
William D. Weber
WEBER LAW FIRM
6666 Harwin Drive, Suite 220
Houston, TX 77036-2251
(713) 789-3300 Telephone
(713) 893-6004 Fax
(832) 723-7970 Mobile
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Mr. Weber has explained mortgage liens.
Creditor liens-- such as those put on your home after a judgment-- are routinely removed in bankruptcy cases. The procedure is to file a "Motion to Avoid Lien" and those motions are granted when the lien impairs your bankruptcy exemptions, which is around 90-95% of the time. Most bankruptcy attorneys are familiar with the process.
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