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.
A judgment lien is created when someone wins a lawsuit against you and records the judgment against your property.
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.
You may be able to get avoid (get rid of) judgment liens in Chapter 7 bankruptcy.
Surrendering secured property in Chapter 7 bankruptcy? Learn the process, pros, cons, and how to handle various secured debts like mortgages and car loans.
You might be able to keep financed personal property in Chapter 7 by paying the creditor its value in one lump sum, a process known as Chapter 7 redemption. Often, people find they pay significantly less than what they owe.
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