Judgment Liens and Mechanics Liens - Westgate Law

Call Now For a Free Consultation
Se habla Español

Judgment Liens and Mechanics Liens

If you filed for bankruptcy and noticed after the fact that there is a lien on your property resulting from a debt to a creditor originally listed in your bankruptcy, there is action you can take. The first step is to identify what type of lien is in place. There are two types of liens: judgment liens and mechanic liens. Regardless of which type of lien is in place, individuals who find themselves in this situation should be able to have the lien removed with a little time and money.

Mechanics Liens: Many contractors will place a security interest on the title to your property in order to secure payment for materials and labor to be performed. These are referred to as mechanics liens. For instance, if you hire a company to install a new roof, they can’t simply take the roof back if they do not receive payment for materials and labor. Instead they would use the lien as a type of security that payment will be received.

Contractors do not need court orders in order to place liens on properties, but they do have to adhere to strict timelines in which they can use the lien to act against the property in the event that they do not receive payment for labor/material provided or the lien can be removed. In most cases, contractors remove the lien once payment has been received for the work provided. In cases where the homeowner and the contractor end their working relationship in a dispute, a lawsuit could result as an attempt to resolve the issue and remove the lien on the property. If you are positive that the lien on your home is not valid, you need to petition the state court (not federal bankruptcy court) to have the lien removed. Most of the time the contractor won’t bother to dispute the request to have the lien removed from the property.

The Judgment Lien: When a creditor’s request to have a lien placed against your property for failure to pay a debt is granted by the court, the ruling results in a judgment lien. This process starts with the creditor suing you, receiving a judgment against you and then requesting that a lien be placed on your property title.

This type of lien can also be removed. When you file for bankruptcy, your liability for the debt was eliminated, but if your bankruptcy case is already closed and the lien is still in place, there will need to be additional steps taken to move the lien. If your bankruptcy case is still active, you simply need to file a motion to remove the lien. Assuming that you filed a Chapter 7 bankruptcy and that you were able to protect your home, it’s a two-step process.

The two-step process is simple enough. 1) Reopen the bankruptcy case. This will not bring your discharged debts “back to life.” If you received your notice of discharge, that is that. They are discharged/eliminated. You only reopen the case because that’s the only way to remove the lien. It must be done while the case is open. Reopening the case will result in a fee paid to the court. 2) File a Motion to Avoid Lien. After reopening your bankruptcy case, you need to file this particular motion with the court. Bankruptcy law in your area may or may not require that you set this motion for a hearing before the court. The motion proves the lien should be removed by showing: property value (you may need an appraisal), lien against the property (you might to provide statements), property is exempt (based on value and liens), and judicial order (proving your case will result in a signed order from the judge).

Once you receive the signed order form the judge, you provide that order to the title or escrow company that is handling the loan in question. That’s all you need in order to prove that the lien is no longer attached to the title.

If you need additional information on how to handle liens that are still attached to property post-bankruptcy contact the southern California bankruptcy experts at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

Call Now For A Free Consultation

Scroll to Top