Avoiding Liens Chapter 13 Bankruptcy | Missouri



Avoiding Liens in Chapter 13 Bankruptcy

Want To Avoid Chapter 13 Bankruptcy Liens? Let’s Help You Ease The Burden 

Although bankruptcy can help you eliminate many types of debt, it does not guarantee that your hard-earned properties will be free from the hands of your creditors. Even if you are successful in filing for bankruptcy, you can still lose possessions you had hoped to save. Avoiding liens in Chapter 13 bankruptcy might help you make your properties away from your creditors.

It is difficult to successfully oppose a judicial lien in bankruptcy. You must fulfill a number of requirements and submit the proper papers to the court. Our Missouri bankruptcy attorney at Westbrook Law Group can help you assess your Chapter 13 bankruptcy status and determine whether you have the potential to avoid or manage liens on your property.

Take control of your financial future with Chapter 13 bankruptcy. Learn how to avoid liens and protect your assets by calling us today. Act now and regain control over your financial well-being.

What is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy entails debt payments and reorganization. It refers to a bankruptcy procedure in the US that enables you to create a three- to five-year repayment schedule. This kind of bankruptcy allows you the opportunity to pay off your debts without losing your priceless possessions and assets. 

What is Lien?

A lien is a legitimate claim or legal right made against a valuable, such as real estate. Usually, liens are used as collateral to pay off debts. By granting a company or person the ability to seize property or file a lawsuit to recover debts or obligations, this action creates security. An obligation, such as the repayment of a loan, is guaranteed by a lien. A lienholder is a person or business that files a lien.

A lien may be created by a court order or a creditor. A creditor could be able to seize the asset that is the target of the lien if the debt isn’t paid.

Types of Liens

Various liens exist to secure assets. Liens are generally part of agreements to purchase real or personal property such as homes or auto loans. In situations where someone has a legal right to another person’s property, this type of arrangement could qualify for a lien. Examples of liens include the following:

  • Mortgage Lien: A mortgage lien is a common type of lien that is placed on real estate property to secure a mortgage loan. If the borrower defaults on the loan, the lender has the right to foreclose on the property and sell it to recover the outstanding debt.
  • Car Lien – When you finance a car purchase or take out a loan to buy a vehicle, the lender typically places a lien on the vehicle’s title. An auto lender can take your vehicle from you if you don’t meet the requirements of your auto loan. This process is known as vehicle repossession.
  • Judgment Lien – A judgment lien is created when a court grants a creditor the right to claim a lien on the debtor’s property as a result of a lawsuit judgment. The lien allows the creditor to collect the debt by seizing and selling the property.
  • Mechanics and Construction Lien – Contractors, subcontractors, or suppliers who have provided labor, services, or materials for a construction project may file a mechanic’s lien if they haven’t been paid. This lien gives them a claim on the property, and they can seek payment by forcing the sale of the property.
  • Tax Lien – Your local government or the IRS may collect unpaid taxes with liens. Taxing authorities may attach liens to both current and future assets. Tax authorities can also collect from bank accounts before other creditors can. In fact, the IRS usually has the right to collect before your other lenders. Bankruptcy doesn’t always discharge unpaid taxes either.

What Liens Are Avoidable?

In bankruptcy, certain liens can be avoided or wiped out. Here are some examples of avoidable liens:

  1. Judicial liens: A judicial lien is a lien that is obtained through a court judgment1. In Chapter 13 bankruptcy, a debtor may be able to “avoid,” or remove, a judicial lien from their property.
  2. Statutory liens: Statutory liens are created by law, such as tax liens. Tax liens are not avoidable in Chapter 7 bankruptcy, but they can be avoided in Chapter 13 bankruptcy.
  3. Non-consensual liens: Non-consensual liens are liens that are placed on property without the owner’s consent, such as a judgment lien. These liens may be avoidable in bankruptcy.

What Happens to Liens in Bankruptcy?

The majority of liens survive bankruptcy, but judgment liens against homesteads do not. Since the lien will still be in place but your personal liability on the loan will no longer exist, it is typical for people to continue paying their mortgages after filing for bankruptcy and maintaining their homes.

One of the fundamental principles of bankruptcy is that unsecured loans (loans without a lien) are discharged while loans secured by liens continue to exist. You must often decide when filing for bankruptcy whether to maintain any property that serves as collateral for a lien and continue making the payments, or whether to turn it over to the lien holder.

How to Avoid Liens in Chapter 13 Bankruptcy?

When filing for Chapter 13 bankruptcy, it may be possible to avoid a judicial lien on your property. Here are some steps you can take to avoid liens in Chapter 13 bankruptcy:

  • File a motion to avoid a judicial lien

A motion to avoid a judicial lien is a request to remove an involuntary judgment lien from your property after you have completed bankruptcy. This motion can be filed in bankruptcy court by your bankruptcy attorney.

  • Use the Chapter 13 plan to avoid liens

The Federal Rules of Bankruptcy Procedure allow for lien avoidance through a Chapter 13 plan. The debtor must indicate in the Chapter 13 plan that they intend to file a motion to avoid a junior lien on their residence. The court provides forms for this purpose.

  • Determine if the lien is a judicial lien

If the lien against the debtor’s property is a judicial lien, the debtor may be able to “avoid,” or remove, the lien from the property. A judicial lien is a lien that is obtained through a court judgment.

  • Show that the lien is unsecured

In order to avoid a judicial lien, the debtor must show that the value of the property is less than the total of the higher priority liens and the junior lien, and therefore the junior lien is unsecured and can be avoided.

  • Consult with a bankruptcy attorney

It is important to consult with our bankruptcy attorney to determine the best course of action for avoiding liens in Chapter 13 bankruptcy. We can help you understand the legal process and your options for avoiding liens.

Call our Missouri Bankruptcy Attorney Now!

It is important to consult with our bankruptcy attorney to determine the best course of action for avoiding liens in Chapter 13 bankruptcy. Our bankruptcy law firm will help you understand the legal process and your options for avoiding liens. 

Our law firm also offers legal assistance in Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, and Rebuilding Credit.

Protect your assets and avoid liens with Chapter 13 bankruptcy. Take control of your financial situation and find relief from overwhelming debt. Do not hesitate to consult with our bankruptcy attorney today and don’t let liens jeopardize your assets.

Call today for a Free Consultation

When you’re in debt, it’s difficult to focus on anything else. But there are steps that you can take to get out of debt – even if your credit is damaged or your income has been cut off completely! Call our St. Charles bankruptcy attorneys at Westbrook Law Group to find out how to escape the shackles of debt and get relief in Missouri.

How Does Chapter 7 Bankruptcy Work?

Filing for bankruptcy comes with both advantages and disadvantages. It is important to know the process, the benefits, and the consequences before making a final decision. A competent St. Louis bankruptcy attorney can help you understand how bankruptcy works.

When you file for Chapter 7 bankruptcy, the bankruptcy court imposes an automatic stay on your current debts. This prevents your creditors from collecting payments, garnishing your wages, foreclosing on your home, repossessing property, evicting you, or turning off your utilities. The automatic stay remains in effect until your bankruptcy case is closed.

After you file your voluntary bankruptcy petition, a court-appointed bankruptcy trustee will review your paperwork and look for evidence of bankruptcy fraud. He or she will handle the consolidation of assets, supervision of selling, and allocation of the collected funds to your lender. The trustee is responsible for reviewing your finances and assets and overseeing your Chapter 7 bankruptcy case.

How Do I Qualify for Chapter 7 Bankruptcy?

Chapter 7 bankruptcy doesn’t necessarily work for everyone. A seasoned Missouri bankruptcy lawyer can help you determine whether you are eligible to file this type of bankruptcy. There are certain requirements that you need to meet before you qualify for Chapter 7 bankruptcy.

You must pass the means test

One of the most important qualifications is to pass the means test. This test determines the amount of your disposable income by deducting certain monthly expenses from your current monthly income. It is designed to keep high-income filers from filing bankruptcy Chapter 7.

If your income is lower than the state’s median income, then you are qualified to file for Chapter 7 bankruptcy. On the other hand, if your income exceeds the state’s median income, you can still pass the second means test after you deduct the allowable expenses. If you don’t pass the means test, you may still be able to file a Chapter 13 bankruptcy.

You need to take credit counseling sessions

To qualify for bankruptcy Chapter 7, you are required to finish an individual or group credit counseling session offered by an approved credit counseling agency within 180 days before filing. Keep in mind that you are required to take the courses before and after the bankruptcy filing.

You must have not received a previous bankruptcy discharge

You cannot be eligible to file for Chapter 7 bankruptcy if you have received a discharge of your debts in a Chapter 7 bankruptcy case within the last eight years. Furthermore, if you attempted to file for Chapter 7 or Chapter 13 bankruptcy but your case was dismissed, you must wait 180 days or more before filing again.

You have no record of court order violations

You must have no record of court order violation and no history of fraudulent filing. Even if you’re eligible to file for bankruptcy, a judge can dismiss your case if proven that you’re attempting to defraud creditors.

How Do I File Chapter 7 Bankruptcy in Missouri?

Filing for bankruptcy can be financially and emotionally stressful. A qualified bankruptcy attorney in St. Charles can guide you throughout the bankruptcy process. You need to know how to fill out the official bankruptcy form, pass the means test, protect your assets from liquidation, take credit counseling sessions from an accredited counselor, and coordinate with the local bankruptcy court.

  • Attend counseling sessions – Before you file for bankruptcy, you are required to take credit counseling sessions from an approved credit counseling agency within 180 days of filing.
  • Fill out bankruptcy forms – You may begin your bankruptcy filing by accomplishing the free and official online bankruptcy form from the website of the United States Bankruptcy Court. You need to fill out the forms with the complete details of your current financial situation. You need to declare all your assets, liabilities, monthly income, living expenses, bank account information, credit card debt, loan debt, and property transactions. You need to ensure that all information and figures in your paperwork are accurate before you submit it to the local court. 
  • Send verification documents to the trustee – Once your bankruptcy case has been filed, your bankruptcy trustee will verify the accuracy of the bankruptcy forms and documents that you have filed.
  • Attend the 341 creditors’ meeting – You must attend the creditors’ meeting. The trustee and the creditors may have questions regarding your current financial situation or about some of the documents you filed.
  • Attend budget counseling – You need to complete a second counseling session called the debt management course within 60 days from the date of the creditors’ meeting. These courses are also administered by accredited credit counseling agencies that will educate you on how to handle debt responsibly.
  • Wait for the discharge notice – If all goes well, the case will be discharged and eligible debts are forgiven. This usually takes place within three to six months after filing your petition.

How Do I Keep My Property When Filing for Bankruptcy?

Bankruptcy doesn’t mean you’ll lose all the assets that you own. There are state bankruptcy exemption laws that can help you keep your property and save your assets. Missouri bankruptcy exemptions cover your homestead, motor vehicle, pension or retirement accounts, wages, and insurance benefits.

Missouri’s homestead exemption protects up to $15,000 of your home equity. When it comes to your personal property, you may protect up to $8,000 worth of household goods, like electronics, jewelry, tools, and furniture. In addition, your retirement accounts or public pension accounts are also exempted. Furthermore, spouses filing together can double the exemption amount if both own the property.

On the other hand, some assets cannot be protected and these are categorized under the non-exempt property. When a bankruptcy exemption doesn’t cover the property, you’ll either lose it in Chapter 7 or have to pay for it in the Chapter 13 repayment plan.

Hire an Experienced Bankruptcy Attorney Now!

Filing for bankruptcy Chapter 7 requires hard work and patience. To ease the burden of the bankruptcy filing, it is advisable to seek legal help from our experienced St. Charles bankruptcy attorneys at Westbrook Law Group. Our bankruptcy law firm will help you determine the best bankruptcy chapter for your case, prepare the required paperwork, and protect the property you want to keep while you focus on getting your finances back on track. We provide exceptional legal service, taking the hard work out of bankruptcy for you.

Schedule a free consultation now by calling us at 636-245-0469.

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