The Sheriff's Sale
If a money judgment is entered against you for a debt, your creditor may have many options to enforce it and collect the money owed. These techniques range from wage garnishment to levying against personal property. Another commonly used method is a sheriff’s sale of a debtor’s property. This process is also sometimes used as a foreclosure sale in the event that you default on your mortgage. In Alabama, however, your real property may be partially "exempt" from collection efforts by creditors. The knowledgeable bankruptcy lawyers at Grainger Legal Services have assisted many Montgomery residents in exploring their options and protecting their rights. We will be happy to discuss your case with you.Real Property Liens and Sheriff's Sales
A sheriff's sale can occur when a judgment lien has been placed on a debtor's real or personal property. To get a lien attached to your real property in Alabama, a creditor must register the judgment with the office of the probate court in the county where you own property. The lien stays attached for 10 years. There is a fixed amount of value that a judgment creditor cannot touch if the real property is your home. This includes the homestead exemption and other prior liens on the property.
You may be able to protect some of your property from a sheriff's sale by declaring a limited amount of the property exempt. In Alabama, single homeowners filing for bankruptcy can exempt up to $5,000 of their home or another property covered by the homestead exemption, as long as the property is not more than 160 acres in size. Married homeowners may be able to exempt more. You will need to submit a homestead declaration if you wish to claim this exemption without bankruptcy protection or alternatively declare the exemption in your bankruptcy case.
Once a judgment creditor has attached the lien to your property, it becomes very likely that the creditor will be paid. Judgment liens can have a negative impact on your credit. Generally, if you try to sell or refinance a piece of real property on which a judgment lien has been placed, the title must be cleared. This means you will need to pay any lienholders before the deal can close. In most cases, a judgment creditor can execute on the lien by having the sheriff seize your property and arrange for a public sale. This can be a hassle for the judgment creditor, especially if there are multiple prior liens on the property and a homestead exemption applies.
If your house is in foreclosure or is going to be sold in a sheriff's sale, you may have the opportunity to cure the mortgage over a period of 3-5 years by filing for Chapter 13 bankruptcy. You will need to pay the arrearage as part of your debt reorganization plan and also continue to make the normal mortgage payments. Therefore, you need to have a reliable source of income in order to use Chapter 13 bankruptcy to save your real property. Debtors who wait until after the property is sold in a sheriff's sale are likely to lose their property.Seek Advice on Bankruptcy from an Alabama Lawyer
If you are concerned about a pending sheriff's sale and contemplating filing for bankruptcy, you should consult an experienced Alabama attorney. At Grainger Legal Services, we have years of experience evaluating clients' finances and helping them through this complex process or finding useful alternatives to it. We serve individuals in locations throughout the South-Central Alabama area from our offices located in Montgomery, Troy, and Prattville. Call us at (334) 260-0500 or contact us online to schedule a free consultation.