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Liens Don't Go Away After Bankruptcy

Posted By admin || 3-Dec-2008

Many debtors who are filing for Chapter 7 or Chapter 13 bankruptcy have one or more liens on their personal assets.

The most common questions about liens during bankruptcy are:

  • What is a lien?
  • Can filing bankruptcy get rid of a lien?

To answer the first question, a lien is a legal interest of a creditor in a particular asset. For example, a lender who has loaned a debtor money to buy a car, has a lien on the vehicle. Filing bankruptcy does not remove any existing liens (including a lien on a car) unless the judge orders the removal of a lien. But, what a bankruptcy will do is eliminate the debtor's personal responsibility to repay the loan/debt. In the case of a car, the lien holder can still repossess the vehicle after the bankruptcy has been discharged; but the lien holder cannot force the debtor to pay any of the remaining loan balance before or after the car has been auctioned.

If you have a lien against your wages or a bank account contact a bankruptcy attorney to find out what actions, if any, can be taken to negotiate the removal of these liens.

Categories: Bankruptcy
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