If your creditor gets a judgment in a lawsuit against you, the court will order you to pay money. This ruling is not self-enforcing. In many cases, a creditor must place a judgment lien on property in order to ensure it gets paid. Judgment liens can be attached to either real estate, such as a house, condominium, or parcel of land, or to personal property, like art, jewelry or other valuable belongings. However, debtors still have rights and options in this situation. At Grainger Legal Services, our dedicated bankruptcy lawyers have the skills to assist you if a judgment lien has been attached against your property in the Montgomery area.
Many people do not realize that if they do not answer a complaint that is properly served, a default judgment can be taken and entered against them. If you allow this to happen in a lawsuit to collect a debt, you forgo your right to challenge the debt. The creditor can enforce the default judgment through a variety of methods.
For example, a judgment lien attaches to property when a creditor registers the judgment with the office of probate court in the county where the debtor’s property is owned. It will stay attached for 10 years, even if the property is transferred to someone else. At the end of that period, the judgment can be revived and a new lien created for another 10 years (or a total of 20 years from the date of the judgment). A judgment lien can prevent you from refinancing or selling real property until the judgment lien and interest are paid in full. Judgment liens accrue interest at the contract rate of interest, or at 7.5% if a judgment isn’t based on a contract.
A creditor’s ability to collect based on the judgment lien is affected by several factors, including the debtor’s claim of exemption under the homestead exemption and a debtor’s decision to file for bankruptcy. In Alabama, the homestead exemption for a debtor’s home is only $5,000 (or $10,000 for a married couple who are both on the deed). It is among the lowest such exemptions in the nation.
Can you do anything to challenge a judgment lien? You can pay the judgment in order to obtain a release from the judgment creditor. You will need to record the release in the probate office where the creditor recorded its lien. You can ignore the judgment lien if you don’t own any real property or personal property over $3,000. If you don’t own any significant amount of property and are not employed or have a bank account, you might be what is called “judgment-proof.” Alternatively, you can file for bankruptcy to avoid judgment liens.
Chapter 7 bankruptcy can wipe out your personal liability for the debt if it is dischargeable. You can only avoid a judgment lien on a piece of property by filing bankruptcy if:
Some courts permit debtors to avoid liens even when the property has no exempt equity, but you should ask a lawyer to determine if this is possible in your case.
If you are concerned about a judgment lien, you may want to file for bankruptcy in Alabama. An experienced attorney at Grainger Legal Services can guide you through the filing process or help you find alternative solutions. We have years of experience evaluating whether clients’ financial situations make them good candidates to obtain relief through bankruptcy. We proudly represent individuals from our offices in Montgomery, Prattville, and Troy, among other surrounding communities. Call us at (334) 260-0500 or contact us online to schedule a free consultation.