My Credit Card Lender Has A Lien Against My Home, Can Bankruptcy Help?

May 6th, 2010 by Reed Allmand

lien_250x251Many debtors begin considering bankruptcy only after a lawsuit or a lien has been placed against their property.  Fortunately for those debtors, bankruptcy has the power to neutralize most lawsuit judgments and liens.  But before the debtor goes through the process of a removing the lien after filing for bankruptcy, they need to considering a few things.

The first question a debtor should consider is if they will keep the property in bankruptcy.  For example, if the credit card company in question has a lien against a debtor’s primary home, then that debtor may want to remove the lien if they intend to use bankruptcy to keep the property.  However, if the debtor is unable to afford the home and wants to surrender the property to the lender during bankruptcy, then it may not be worth the effort to go through the process of removing the lien from the property.

Second, a debtor needs to look at all of their debts relative to income because bankruptcy is not just about discharging one or two debts, it is about bringing a debtors total financial health in line so that they can have a fresh new start financially.  This is why some debtors choose to walk away from their home during bankruptcy even if they could with some effort afford the monthly payments.  For example, a debtor who is significantly underwater with their mortgage and is unable to win a mortgage loan modification from the lender, may choose to surrender the home in bankruptcy and get a total fresh start after bankruptcy sans the mortgage payments. 

Since every debtor’s situation is unique please work with your bankruptcy attorney to create a bankruptcy strategy that is effective and works well with your financial goals.

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About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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