One of the most common concerns related to bankruptcy and debt is losing property to creditors. When a creditor has a lien on your property, the risk of losing that property is real. Examining how bankruptcy impacts liens on your property may help you avoid the negative consequences. Feel free to talk to a Tullahoma bankruptcy lawyer to explore your legal options for escaping liens on your property.
Effects of Bankruptcy on Property Liens
When it comes to bankruptcy and property liens, bankruptcy can pause liens on property but may not always completely stop them. During the process of filing for bankruptcy, you may experience a temporary break from creditors taking action in terms of liens on your property. However, some liens will remain in effect after debts are discharged in bankruptcy.
This is because a lien is considered a secured debt. Unlike unsecured debt, secured debts involve a certain type of contract between you and the creditor. The contract rules allow your creditor to repossess or sell any property your creditors have a lien on. For some people, this might look like losing their vehicle, while for others, this could mean losing their home.
A common frustration with this situation is that even if bankruptcy discharges the debt owed to secured debt, a creditor may still repossess the property. This usually happens when payments are not made for the property after the bankruptcy case is completed. Consider consulting with a lawyer about how this works and what your legal options are.
Legal Options for Dealing with Property Liens
There are some legal options for property liens under different types of bankruptcy that may help you prevent repossession. A reaffirmation agreement can be signed with your creditor to stop repossession after bankruptcy. What this does is create a new payment plan that requires you to continue paying the secured debt after bankruptcy.
Not paying the secured debt could lead to repossession of that particular property. The creditor promises not to take your property if you promise to make timely payments. This can sometimes lead to a more affordable and manageable payment plan with lower interest rates.
In some cases of judgment liens, you can work with the court to remove liens from exempt property. This means that you will not have to worry about creditors taking any property that is deemed exempt from liens. What this looks like is asking the bankruptcy court to remove liens from a court judgment filed against you.
You may also find reassurance in the fact that certain types of property and belongings are almost always exempt from liens. Common examples include household goods, food, and life necessities.
Contact Tom Bible Law Today
Dealing with liens on your property can be stressful. Start by contacting us at Tom Bible Law at (423) 424-3116 for a consultation today about your legal options. Our legal team of Tennessee bankruptcy attorneys is ready to help you escape the negative effects of property liens through by exploring various bankruptcy options. We can be found in the Tennessee cities of Chattanooga and Tullahoma.