If you are in a period of financial hardship, there is no price that can be put on the ability to declare bankruptcy in order to have the ability to restore your financial credibility. Prior to declaring bankruptcy, people understandably want to know exactly what debts are able to be cleared. One common area of confusion is liens. This confusion is can be quite justified as the law treats each of the three types of liens differently.
One type of lien is known as a consensual lien. A consensual lien is a lien that is placed on property as collateral. This type of lien is typically applied to the purchases a car or home. Consensual liens are often not avoidable under bankruptcy. ‘Unavoidable’ means that you must either pay off the lien or forfeit the property. A bankruptcy will not have an effect on this. An expert bankruptcy attorney can give you guidance on settling your consensual liens.
The second type of lien is a statutory lien. This is a type of lien that was created due to statutory authority, a law enacted by Congress. Perhaps the best known example of a statutory lien is a tax lien by the IRS on property. Statutory liens are also often not avoidable and you should consult with an attorney on your rights and obligations if you have statutory liens.
The last type of lien is a judgment lien. This is the type of lien that a court uses when a debtor is sued in court for non-payment. If you were to not pay your credit card debt and were sued in court you could have a judgment lien. The good news is that judgment liens can (in many cases) be resolved through filing for bankruptcy. The key is that the lien must attach to some protected property under bankruptcy law. Again, an attorney can help you understand this link and allow you to take advantage of the full extent of your rights.
For many, bankruptcy can be a path to regaining financial stability. If you have excessive debts and feel like you are drowning, then bankruptcy may offer you help by wiping away some or all of your debts. However, before deciding on bankruptcy, be certain to speak with an attorney and disclose any liens that may be held against you.
If you are thinking about filing for bankruptcy in New Jersey or Pennsylvania, speak to one of our experienced consumer bankruptcy attorneys
If you are thinking about filing for Chapter 7 or 13 bankruptcy, our attorneys can help you navigate the the complicated process of selecting which type of bankruptcy fits your situation and discharging all types of debt that you have on your financial record. Call today for a free consultation. We have three convenient locations in New Jersey and Pennsylvania.