In bankruptcy you can often avoid a judgment lien on your
home. Typically liens on your home are of two types: consensual, agreed to, or
nonconsensual, not agreed to. Most liens are consensual, in other words the
lien was agreed and consented to, e.g. a mortgage on the home. Consensual liens
are generally not avoidable, except under special circumstances.
A judicial lien, however, is a nonconsensual lien and may be
avoided. A judicial lien arises when a judgment is entered against the judgment
debtor in favor of the judgment creditor. The judgment creditor then obtains a
certified copy of the transcript of judgment from the court. Then, it is recorded
in the county records in the county where the debtor owns real estate.
Once recorded, the transcript of judgment places a lien on
any real property owned by the judgment debtor in that county for the amount of
the judgment. The lien is done without
the consent of the homeowner.
In bankruptcy, however, the debtor may avoid the fixing of a
judicial lien on the debtor’s interest in property to the extent that such lien
impairs the debtor’s exemption in that property to which the debtor would have
been entitled if such lien is a judicial lien. A judicial lien impairs an
exemption to the extent the lien, all other liens on the property, and the
amount of the exemption that the debtor could claim if there were no liens on
the property, exceeds the value that the debtor’s interest in the property
would have in the absence of any liens.
In Colorado a homeowner
is entitled to a $75,000 homestead exemption if under 60, or $105,000 if 60 or
over or you or your spouse is disabled. In the case of a judicial lien, the debtor’s
bankruptcy attorney determines the extent the judgment lien impairs the
homestead exemption. Then, a motion to avoid the judicial lien is filed. I many
cases there is insufficient equity in the home and the entire judicial lien is