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Will Chapter 7 Bankruptcy Wipe Out a Judgment Lien

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  • 12-26-2016, 08:53 AM
    lawfacts
    Will Chapter 7 Bankruptcy Wipe Out a Judgment Lien
    If a judgment holder in California files a lien against the debtor's property for the amount of the judgment, will the debtor's subsequent bankruptcy wipe out the lien? The judgment itself is for a debt that is dischargeable in bankruptcy.
  • 12-29-2016, 02:31 PM
    Mr. Knowitall
    Re: Will Chapter 7 Bankruptcy Wipe Out a Judgment Lien
    Although a valid lien will survive bankruptcy, it will also be junior to earlier liens against the property. If the debtor had a prior mortgage (or mortgages or a HELOC) and does not keep the property, those liens (and any other prior liens) will be paid before the judgment lien. If the debtor keeps the property, it is possible that there will be sufficient equity in the property at the time it is eventually sold or transferred that the judgment creditor would be paid, assuming that the person buying or receiving the property is not willing to take it subject to the lien.
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