Does Filing Bankruptcy in Atlanta, Georgia get rid of Liens?

Filing bankruptcy in Atlanta, Georgia could get rid of judgment liens against you. There is a bankruptcy law that says you can wipe out the lien so long as you do not own any property with value to which the lien can attach. A judgment lien is a lien claiming interest in all of your personal property that a creditor files after obtaining a monetary judgment against you. To fully understand what a judgment lien is and how bankruptcy wipes it out, it is probably beneficial that you understand what a judgment is and how the lien affects you.

Judgments in Georgia

A judgment is a court order signed by a judge that allows a creditor, such as a bank or a credit card company, to collect money against you. For example, if you failed to pay your credit card and the credit card company sues you and wins, the credit card company has a judgment against you.

A creditor can take a judgment and collect it in several ways, including:

  1. Filing a judgment lien;
  2. Garnishing wages;
  3. Garnishing bank accounts; and,
  4. Levying property.
The Judgment Lien in Georgia

A judgment lien in Georgia is known as a writ of fieri facias. After a creditor obtains a judgment against you, it can take that judgment and record the lien in the county in which you reside. The lien basically gives the creditor an interest in all of your property.

For example, you own a home in Georgia. Let’s say American Express has a judgment lien against you in the amount of $10,000.00. Your home is worth $150,000.00 and you have a mortgage on the home in the amount of $140,000.00. You sell your home to a third party for $160,000.00. When you go to close on the sale, a title search will show that the American Express judgment lien of $10,000.00 is hanging out there. You will not be able to transfer the home to the third party buyer without satisfying the AMEX judgment lien.

The judgment lien actually can attach to more than just your home. In theory, it can attach to all personal property, such as your car and personal belongings. To obtain and sell those items, a creditor must have a sheriff levy the items. This is unlikely to happen, as it is costly and usually will not result in money being paid to the creditor.

Avoiding the Judgment Lien in Bankruptcy

Section 522 of the federal bankruptcy code allows debtors who file either Chapter 7 or Chapter 13 bankruptcy in Georgia to petition the court to get rid of judgment liens. In order to successfully get rid of the lien, a debtor must show that s/he has no ownership in any property, whether it be real estate or personal property, that has enough value to which the lien can attach. In showing this, the debtor can apply property exemptions allowed in Georgia to protect the property from the lien.

For example, a debtor owns a car with a value if $5,000.00. Under Georgia law, the bankruptcy exemption or protection provides protection to the car for up to $3,500.00. Another Georgia bankruptcy exemption known as the “wild card” exemption can protect the additional $1,500.00 difference. Thus, the debtor can ask the court to avoid any judgment lien as to the car because s/he has enough exemptions to fully protect the car from creditors in a Georgia bankruptcy case.

Bankruptcy laws are fairly complicated, so if you have a lien against your property in Georgia, it is best to consult with an Atlanta bankruptcy attorney for advice. Call the Law Offices of Charles Clapp at (404) 585-0040 to schedule a free consultation.