If you own a home or any real estate but have outstanding judgments and liens, you should be concerns of lien(s) recorded against your home or real estate.  If you intend to leave your house or real estate to your heirs, you should remove any liens or judgments recorded against the real estate.  Depending on the types of lien, bankruptcy can strip off or avoid the lien.

Here are some common liens faced by homeowner and property owners:

1. Home Equity Line of Credit, Second Mortgage, Junior Liens. You can strip off those liens (aka lienstripping) by obtaining a discharge in Chapter 13 Bankruptcy and obtaining an Order from the bankruptcy court to Value the Collateral in question.  One of the requirements is that the value of the house or real estate is less than the balance of the amount owed to the First Mortgage, First Deed of Trust, or Senior Lien.  However, due to the rising home values in most cities in Northern and Central California, this is a tough requirement to meet.  This was more common during the recession when a majority of property owners owe more than what the real estate is worth.

2.  Judicial Lien or Judgment Lien.  You can find this lien recorded as an "Abstract of Judgment" at the county recorder's office.  This type of lien can be avoided either through Chapter 7 or 13 Bankruptcy and obtaining an Order from the bankruptcy court to Avoid Judicial Lien.  The Judicial or Judgment Lien must impair the exemption you are entitled to under the California exemptions either under CCP §§ 704 or 703.  As of May 16, 2017, the California homestead exemption is $75,000 if single; $100,000 if debtor is member of a family unit and at least one family member has no interest in the homestead or the only interest in homestead is a community property interest with judgment debtor; $175,000 if debtor or spouse who resides in the homestead is 65 or older or if physically or mentally disabled; $175,000 if it is an involuntary sale and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year.  CCP § 704.730.  CCP § 703.140(b)(1) provides a homestead exemption of $26,800.  However, facing the same problem as with lienstripping, rising home values can prevent or reduce the amount of judicial or judgment lien that can be avoided through Chapter 7 or 13 Bankruptcy.

Procrastination can make or break your Chapter 7 or 13 Bankruptcy case especially if you own real estate when home values are rising.  For more information about the removal or avoidance of liens through Chapter 7 or 13 Bankruptcy, call Muoi Chea, Bankruptcy Attorney serving Sacramento, Stockton, Fairfield, CA and surrounding Northern and Central California cities and counties.  She represent consumer and small business owners in Chapter 7 and 13 Bankruptcy hearings in Sacramento Bankruptcy Court and Modesto Bankruptcy Court.