Judgment Liens result when you are served with a creditor’s lawsuit — you have 30 days to respond — and fail to draft and file the required ‘answer’ to the civil lawsuit summons with the court. Many people, already in financial trouble, don’t have the money to hire a lawyer to defend them and write/file the required ‘answer’ and then defend the lawsuit or negotiate an out-of-court settlement, resulting in a default judgment and later a judgment lien.
If you fail to respond to a creditor’s lawsuit per the time requirements, the case comes to a hearing where the creditor can obtain a default judgment against you and then record the judgment lien with the County recorder’s office.
That judgment lien then allows the creditor to garnish your wages, place a lien against any real estate and personal property you have, including your home. The creditor can also pursue a bank levy, whereby the sheriff can seize any funds in your bank accounts. Learn more about stopping a bank levy here.
AVOID A JUDGEMENT LIEN IN BANKRUPTCY – Read More
Obtaining Judgment Liens is Why Creditors File Lawsuits
When the creditor sues you, this is so that they can get a judgment from court, usually state court. Here in Orange County, California, that takes place in the ‘County Seat’ city – Santa Ana. The purpose of this is to give the creditor legal options on collecting their debt – even if that is years later.
Removing Judgment Liens from Your Residential Real Estate
With a judgment secured from the Court, creditors can do wage garnishments, bank levies and put judgment liens on any real estate you own. In bankruptcy you can remove judgment liens by filing a proper motion, provided you meet the criteria to remove such a judgment lien.
As a bankruptcy professional with more than 20 years of experience, I have successfully removed many judgment liens from my client’s personal residences. You must meet the criteria to remove such a judgment lien in a bankruptcy case.
Over the course of my professional career I have established relationships with real estate professionals who have the respect of the bankruptcy court. This is very important as the credibility of your evidence is very important in removing a judgment lien.
Bankruptcy is a Powerful Tool to Remove Judgment Liens IF You do not PROCRASTINATE.
Unfortunately, I have consulted with potential clients who have ignored judgment liens for many years. Many of these individuals and couples saw ‘charged off’ on their credit reports — MISTAKENLY thinking this meant that the debt was no longer owed…
Wrong! A tragic assumption. The process of ‘charging off’ a debt is an accounting procedure that is necessary for tax reasons for the creditor. You still owe the FULL REPAYMENT of the loan, including late fees and years of interest.
These creditors know that if you file bankruptcy in the early years when the loan is uncollectable, you might get the load discharged, so they will wait five or ten years — constantly monitoring the value of your home and the rising equity — that often increases over the years. When you have enough equity in your real estate, they ‘seemingly magically resurface’ and demand FULL REPAYMENT immediately. But it gets worse, as the demand now includes the threat of them foreclosing on your real estate if you fail to pay the note including late fees and interest in full.
Removing a Judgment Lien – Timing is Very Important
Years later, when the equity in tour real estate is more than enough to cover the loan amount (including late fees and years of interest) there is NO legal mechanism in the bankruptcy process for the removal of the judgment lien. This highlights the key fact in removing a judgment lien-timing is very important. My office is ready to discuss your unique situation and how bankruptcy may provide a mechanism to remove a judgment lien from your residential real estate.
Do You Need to Remove a Judgment Lien? Call Michael Now
Judgment liens on your real estate is often why potential clients contact us. Be proactive. Call to discuss your unique situation and how bankruptcy may provide a mechanism to remove a judgment lien from your residential real estate.
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