Avoiding Leins Under Chapter 7 Bankruptcy

If you've filed or are considering filing a Chapter 7 bankruptcy, it's probably because you want your debts discharged.  The general rule in bankruptcy is that liens are not discharged.  However, certain liens can be discharged if they are avoided.  So, how do you avoid a lien then?

Some of the possible ways are:

Redeem your property

You can avoid your lien by reducing it through redemption.  You will pay the creditor what the property is worth rather than what you owe on the debt.  You must pay the creditor a lump-sum within 30 days of creditors' meeting.

File a motion to reduce or eliminate

You can also file a motion to have your liens reduced or eliminated.  However, the lien must be either a "judicial lien" or a "non-possessory, non-purchase money security interest" to be avoidable.

Surrender your property

You can avoid the lien by surrendering the property.  You must list the property on the "Statement of Intentions" form (a copy must be sent to the creditor).  If the creditor fails to pick it up within 30 days of the creditors' meeting then the property will be "abandoned," in which case it is yours to keep.

If you have any questions about bankruptcy please call 1st California Law at (949) 735-8499 for a free attorney consultation.

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