Filing for bankruptcy is an option available to almost every consumer and business in the US. However, despite the layman’s access to filing for bankruptcy, the fact remains that it is a complex, highly nuanced legal process. While a debt from which a judgment lien is obtained is discharged in a bankruptcy proceeding, a judgment lien can still remain after a bankruptcy is concluded and a bankruptcy filer must take certain steps to fully remove it. This responsibility is best approached with the help of a professional. Behm Law Group, Ltd. offers the counsel of an expert bankruptcy lawyer in Fairmont, MN, throughout your petition.
What is a Judgment Lien?
In a state civil court case, after a judge or jury hands down a decision, or after a court-approved settlement, a judgment is entered by the court. As part of a typical judgment, the court orders the payment of money from one person to another. But the person who owes the money (the debtor) doesn’t always pay up. A judgment lien is one way to ensure that the person who won the judgment (the creditor) gets what he or she is owed. A judgment lien gives the creditor the right to be paid a certain amount of money from proceeds from the sale of a debtor’s property.
In Minnesota a judgment lien can attach to any real estate a person has an ownership interest in (farm, house, condominium, etc.). A judgment lien is automatically entered against any real estate that a debtor (the person against whom the judgment has been assessed) owns in the county in which the judgment was awarded. If the person owns property in another county, a creditor can take a judgment and docket or file it in that county at which time it becomes a judgment lien against any real estate a debtor owns in that county, too. A judgment lien can last up to ten (10) years and it can remain a lien on a debtor’s real estate for that entire time. A judgment lien can also be renewed for successive ten (10) year periods. If a judgment lien is levied against someone’s real estate, any sale of the real estate can’t be completed unless the judgment lien is paid or expunged/removed.
Judgment Liens and Bankruptcy
A discharge obtained through bankruptcy nullifies the debt giving rise to a judgment lien. However, a discharge does not require a judgment creditor to take affirmative steps to remove a judgment. In other words, a creditor is not required to go to the county in which it obtained the judgment and ask the court to remove the judgment lien from a debtor’s real estate. Thus, even after a bankruptcy has concluded, a judgment lien becomes a nuisance lien that still clouds title to a debtor’s real estate and prevents any sale of the real estate from being consummated.
In order to remove a judgment lien from the real estate, a debtor must, after the bankruptcy has concluded, file an application to discharge or expunge the judgment lien with the state court in which the judgment and judgment lien were obtained in the first place. Generally, one can only do this with regard to a judgment lien on real estate that one owns and actually occupies as one’s homestead. Minn. Stat. §548.181 is the statute that one must use to remove or discharge a judgment from real estate that one owns. There is a specific protocol that must be followed. Navigating the procedure and making sure it is done correctly is extremely difficult without the help of a knowledgeable, trained professional. With the help of Behm Law Group, Ltd. and the expertise of a Behm bankruptcy lawyer in Fairmont, MN, filing for bankruptcy can be a successful experience that offers financial recovery. We can assist you with the removal of judgment liens following the completion of a bankruptcy case. Contact us today at (507) 387-7200 today for more information.