Attorney at Law
Using Bankruptcy to Remove Liens from Your Home
If you own real estate and have credit card companies or other creditors who successfully sued you in the past, there is a good chance that those creditors put what is called a judgment lien on your house. Unfortunately Ohio law does not require creditors notify you when they do this, so many clients never know of it until they come into my office and I run a check for them. A judgment lien attaches to your house just like a second mortgage and usually ends up preventing you from developing any equity in your property. When you go to sell the property you find out you're going to get a lot less than you thought out of the deal, because the judgment liens have to be paid off before you can see any profit for yourself.
Fortunately bankruptcy provides a way to strip judgment liens off of your property under certain circumstances. Usually this is possible unless you purchased your house more than 10 years ago and never refinanced-- people who purchased their house relatively recently or who have refinanced their homes are usually eligible to have their liens stripped off. Stripping off judgment liens is a separate legal procedure from the bankruptcy itself and requires a special motion and court hearing where creditors might appear to prevent removal of the lien.
If you hire an attorney for bankruptcy make sure they check to see whether there are any liens on your property that need to be stripped off. I have seen many, many cases where people hired an attorney for bankruptcy who either did not know there were judgment liens on the property or who did not let their client know about the judgment liens, and they never got stripped off. Once the bankruptcy is over it becomes very expensive and sometimes impossible to go back and strip off those liens.
As a final word, please note that this lien-stripping option only exists for judgment liens, meaning cases where a creditor sued you for money, won the lawsuit, and then put a lien on your property. You cannot strip off second mortgages and tax liens using this procedure.