Avoiding (Getting Rid of) Liens in Chapter 7 Bankruptcy

Lien avoidance is a powerful and important tool available in Chapter 7 bankruptcy. If you have liens recorded against your property, you may be able to get rid of them through lien avoidance. However, you can only "avoid" certain types of liens, and those liens must meet further criteria.

This topic explains what liens are, breaks them down by type, and discusses the various types of liens you can get rid of in Chapter 7 bankruptcy.

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What Are Liens & What Happens to Them in Bankruptcy?

What Is a Judgment Lien?

A judgment lien is created when someone wins a lawsuit against you and records the judgment against your property.
What Happens to Liens in Chapter 7 Bankruptcy?

A lien is created when a creditor or someone else has a security interest in your property. Liens comes part and parcel with secured debts. A debt is secured if it is linked to a specific item of property, called collateral, which guarantees payment of the debt. If you don’t make payments when they are due, the creditor can repossess the collateral. The creditor’s legal claim on the collateral is called a lien.

Avoiding Liens

Getting Rid of Judgment Liens in Bankruptcy

You may be able to get avoid (get rid of) judgment liens in Chapter 7 bankruptcy.

Other Options for Dealing With Liens

Surrendering Secured Property in Chapter 7 Bankruptcy

In Chapter 7 bankruptcy, if you don’t want to keep an item of property that serves as collateral for a secured debt, you can “surrender" it.
Redeeming Secured Property in Chapter 7 Bankruptcy

You might be able to keep financed personal property in Chapter 7 by paying the creditor its value in one lump sum.

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