What Happens To A Lien When The Debtor Goes Into Bankruptcy

What Happens To A Lien When The Debtor Goes Into Bankruptcy

The bankruptcy laws give debtors various ways to deal with liens in bankruptcy. One is called “lien avoidance” and it allows a debtor to wipe out a lien completely when the lien impairs the debtor’s homestead exemption. This means that if no equity remains after the mortgage, including any second mortgage, and the homestead exemption is deducted, the debtor may be able to eliminate the judgment lien via 11 USC § 522(f). While rare, it is best to know all risks.

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