If you are looking to short sell your home, a judgement lien may be an obstacle for your real estate agent to negotiate with lien holders on the home to complete the sale. When a short sale is completed, all of the lien holders on the home need to have conditions satisfied in order for the sale to go through. A lien holder is anyone who has a lien on your home or secured loan on your home. So, your first mortgage is considered to be your first lien holder. If a credit card company sued you and were able to put a judgement lien on your home, the credit card company is also considered a lien holder on your home. Lien holders have to release the lien in order for the home to be sold. Lien holders will release the lien if the debt is paid or if they are able to negotiate to release the lien for a settlement amount. If you can’t come up with enough money to remove the lien from a home, a short sale may be impossible and you may face foreclosure, and after the foreclosure, the debt amount on the liens becomes unsecured debt that will follow you. The good news is that a bankruptcy can remove liens from your home. Even after the foreclosure, you may need to file for bankruptcy to eliminate all of the resulting debt amounts, but if you want to avoid foreclosure to lessen the impact on your credit and improve your opportunity to buy your next home, you should aim to short sell the home by removing the liens through bankruptcy.
A bankruptcy can remove liens on homes so that there are no obstacles while negotiating a short sale or even a regular sale. There is an additional motion that needs to be filed during the bankruptcy called a lien strip motion that will allow the lien to be removed from the home and the debt to be discharged in bankruptcy. A lien strip actually removes the lien from your home so the debt is no longer attached to the home. When the debt is no longer attached to the home, the debt amount becomes unsecured debt which can be discharged or eliminated in a bankruptcy.
There are other requirements that need to be considered for a lien strip to be effective. It is dependent on the outstanding loan amounts and the value of your home. We can review all of these details for you and make sure that you qualify for the bankruptcy and for a lien strip motion if that is your goal. To explore these options, you can contact Bankruptcy Law Professionals at (855) 257-7671. We have offices in Orange County and Riverside to serve you.