Stockton Bankruptcy Attorneys, California

Generally, if a debtor files for bankruptcy and has liens on some of his property, his liability will be discharged, but the lien won't be stripped without a formal motion. That means the debtor must first file the bankruptcy petition, then prepare a written motion for the sole purpose of avoiding the lien. Section 522(f) of the Bankruptcy code allows debtors to take liens off their property in both chapter 7's and 13's. In order to strip a lien off, the lien must impair an exemption and the debtor must be a person. Section 522(f) of the bankruptcy code may not be used by corporations.

Bankruptcy Lawyers in Stockton, CA

In most cases, a debtor can reopen their bankruptcy case to strip off liens after their cases have closed. In McDonald v. Home State Bank & trust Co., 161 BR 697, the court stated that in deciding whether debtors can reopen bankruptcy cases for the purpose of avoiding liens, the court should consider (1) reasons for the debtor's delay, (2) the prejudice to the creditors that may result and (3) any other fair considerations. In the case of In re Quackenbos, 71 BR 693 (ED PA, 1987), the court stated that the debtor may lose their right to avoid a lien if their delay caused the creditor some kind of unfair prejudice. Unfair prejudice means that the delay caused some kind of injury to the creditor's rights.

Attorney Bankruptcy Stockton, San Joaquin County

A lien can be created consensually through agreements (like a contract) or nonconsensually by the judicial process. When a creditor sues a debtor and gets a judgment, that creditor can then place a lien on the debtor's property. Only judicial liens can be stripped under section 522(f) of the bankruptcy code. Section 522 doesn't specifically state that the debt must be dischargeable in order to be avoided, but many courts have held that as a requirement.