Judicial Liens on Your Home Can Be Avoided Even Without Equity

During your bankruptcy case, you may be able to get the court to reduce or eliminate judgment creditor liens (called judicial liens) on your home. This is called lien avoidance. 

You can avoid a judicial lien on your home only if the lien "impairs an exemption." That is, if you can claim your home as exempt from creditors under the homestead exemption laws, and the judicial lien would deprive you of the full exemption, the lien can be avoided. According to the current editions of Nolo's bankruptcy books, courts have ruled that if you do not have equity in your home, you cannot avoid a judicial lien because the lien will not impair an exemption.

However, some courts have since ruled otherwise, finding that you may avoid a judicial lien even if you don't have equity in your home. Because different courts have ruled differently on this issue, you should contact a lawyer for more information about what would happen in your case.