Find Out What a Debt Relief Lawyer Can Do to Help Protect Your Equity In Your Most Valuable Asset
Although the circumstances and specifics may vary slightly, perhaps you can relate to this scenario: when you go to refinance your home or sell it, you discover that someone is waiting to get paid. A creditor has placed a judgment lien against your home, which the title insurance company is requiring be paid as part of closing.
You know you had trouble with a creditor in the past, and you were threatened with a lawsuit, but you didn’t realize that it was going to come to this. Now, you’re trying to go about your business of bettering yourself by refinancing or selling, but you’re back in hot water again, dealing with the past. What’s worse, you’re angry that this creditor went behind your back and placed a judgment lien on your home that you didn’t even realize was there.
Keep reading to find out how our Denver debt relief attorney Michael Wink recommends resolving a judgment lien on your home, so you can finally move on from your financial difficulties.
What Is a Judgment Lien and What Can You Do About It?
When an unsecured creditor (e.g., credit cards and medical bills) wishes to get paid to collect on a debt, they sue you, so that they can obtain a judgment against you. Once the Court issues a judgment against you, it can be used by the creditor to garnish your wages or funds in the bank. It can also be filed with the Clerk and Recorder’s Office in your county, which makes it a judgment lien on your home. There is no separate court proceeding or order required for the creditor to turn the judgment into a judgment lien on your home, and all they need to do is file the paperwork, and they’ve got what they want.
A judgment lien can stay on your home in Colorado for six years, and can be renewed up to two times. This means a judgment lien can be on your home for 18 years. Within that time frame, many homeowners make decisions about their home, including selling in order to invest in a larger or nicer property or refinancing the mortgage for a better interest rate to reduce mortgage debt. However, a judgment lien can throw a wrench in your plans, all because of past difficulties with medical bills, a credit card, or another form of unsecured debt.
How do you get rid of a sizable judgment lien affecting the equity in your home? Our debt relief attorney at The Wink Law Firm has two cost-effective solutions:
Each of these powerful legal strategies require an attorney’s help. Choosing a debt relief lawyer will ensure you have a cost-effective method to have your judgment lien removed.
Our Debt Relief Attorney’s Approach to Debt Settlement on a Judgment Lien
If you discover that a creditor wants to collect on their debt before you’re able to move forward with mortgage refinancing or selling your home, offering this creditor a settlement may work in your favor.
Our debt settlement strategy works like this:
- We present your creditor with a lump sum settlement that is a fraction of what you originally owed.
- Your creditor is incentivized to accept this settlement because there’s less risk in a settlement than not getting paid at all.
- While we can often help our clients settle for 50% of what they owe, it tends to take more to settle a judgment lien (approximately 60% – 80%).
After you work with our Denver debt relief lawyer on debt settlement with your creditor, you’ll be free to sell or refinance without the restriction of a judgment lien. The Wink Law Firm can also help If you have additional creditors from past medical debt, credit cards, tax debt, or even business loans that you personally guaranteed. We will help you find a settlement solution for these debts, where you pay less than you owe and move on to a better future. Because you typically settle for less prior to being sued (50% versus 60%-80%), it is best to be proactive about settling unsecured debt before lawsuits start rolling in.
If you don’t have the funds to settle in a lump-sum payment, the attorneys at The Wink Law Firm can coordinate with your lender to have the settlement paid from the refinancing or sale proceeds. In this situation, it is critical that neither the lender nor title insurer contact the judgment lien creditor for a payoff amount, which will let the creditor know of the planned sale or refinance and make settlement for less difficult to achieve.
How Bankruptcy Can Remove a Judgment Lien
Chapter 7 and Chapter 13 bankruptcy are cost-effective ways to have certain debts discharged or, in the case of Chapter 13, pay off prioritized debts on a three-to-five-year payment plan.
If there are debts that need to be settled in Chapter 7 or 13 bankruptcy before they are discharged, that doesn’t mean that your creditors can take any collateral they choose. There are many exemptions to the assets the bankruptcy trustee can use to settle your debt, including:
- 80% of your wages.
- $2,500 of the funds in your bank account.
- $6,000 worth of household goods.
- $2,500 worth of jewelry.
- And many others.
You can also protect up to $250,000 of home equity if you are 59 or younger and not disabled. If you or a dependent family member is 60 years of age or older or disabled, you can protect up to $350,000 worth of equity in your home.
How does this relate to a judgment lien? If the equity you’ve built in your home is under $250,000, you can remove this judgment lien in a bankruptcy proceeding. For example, if you only own $150,000 of your home in equity, you’re under the exemption amount, and you can avoid the judgment lien by filing a separate motion within your bankruptcy.
But what about those who discover during refinancing or a sale that they’ve built equity that takes them above the exemption amount? At this point, you cannot remove the lien in bankruptcy. In such circumstances, you should explore settlement or paying the lien through a Chapter 13 bankruptcy. However, if the judgment lien causes your total equity to dip below the exemption amount, the judgment lien is said to “impair” your right to exempt money. In that case, you can bifurcate the judgment lien in bankruptcy, which will limit the amount of the lien to the amount of unprotected equity you have (e.g., the amount over $250,000 in most cases) at the time you file bankruptcy.
Get Free of Debt With The Wink Law Firm’s Debt Relief Solutions
The Wink Law Firm’s Denver debt relief lawyers are ready to help you take advantage of our key legal strategies. We want to see you move forward with your goals for your home and your finances without having to worry about your creditors.
Get a free consultation to find out how we can help you get a judgment lien removed in bankruptcy or through debt settlement. Contact The Wink Law Firm’s debt relief attorney online or call (720) 523-0620.