Does Filing Bankruptcy Remove A Lien On A House?

A lot of homeowners these days find themselves owing a lot of money and unable to pay it back. There are also homeowners who find themselves unable to deal with or have the finances to respond to lawsuits. In order to get their money back, lender or bankers would put a lien on the homeowner’s property. The question now is, can filing for bankruptcy remove the lien on the house? First of all, a bankruptcy filing does have the potential to remove most of your debts. Most of the time, filing for bankruptcy would remove the financial obligations that led to you getting a lien filed against you in the first place. It is important to understand however, that a lien could not be removed even after you have filed for bankruptcy. So even though you are not legally required to pay off the debt that led to the lien, the lender can still take your property.

There are actually three ways that liens come about. Buying secured property is one of the ways you can come about a lien. Two examples of secure property are cars and houses. So if you take out a mortgage or a car loan, your lenders or banks would have a lien on this property. When you default on payments, the banks can and will foreclose on the property. Another way you can get a lien is when it came from a court judgment. You could remove the judgment lien if the lien is attached to the property which allows you to remove when you file for bankruptcy. You are going to have to file for additional paperwork however, in order for the court to remove records of the lien.

The type of lien that you are going to have difficulty getting rid of in a bankruptcy is a tax lien. Usually, you cannot get a lien for back taxes that were discharged during a bankruptcy filing unless the debt on these taxes unless they are three years old. You have to do your research carefully on the details of filing a bankruptcy to try removing a lien on your property or if possible, get legal advice. This way, you can be sure that you are going about the process correctly and you are not going to end up making decisions or taking actions that you would regret later on.