Basically, you take your home value, subtract your mortgage and your homestead exemption, and if there’s any money left over, judicial liens stay attached to your home. If there’s no money left over, you can remove them or avoid them in a chapter 13 bankruptcy.
This will not be a complicated discussion of the lien avoidance. Here’s the code section we rely on in the Bankruptcy Code section 522(f) :
(f)(1)Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—(A)a judicial lien, other than a judicial lien that secures a debt of a kind that is specified in section 523(a)(5);
I am also attaching a Lien Avoidance Worksheet that we’re required to use here in Utah. You can find the form here:
Here is the best kind of example I can give you. I am cutting and pasting an email with one of my clients showing my calculations:
Sorry, it was well past my bedtime last night and I didn’t give a good full response.
Here are the numbers:
$127000 — first mortgage
$42,000 — 2nd mortgage
$42,000 — homestead exemption (we can’t claim a double exemption because your wife is not on title)
= $211,000 of the home is safe (protected)
then we get to throw in a proposed 6% realtor’s fees even if someone considered sell it which is another 12,000, so
$223,000 is safe from normal creditors when we figure out repayment plan in the 13.
Stripping Judgment Liens
As for judgment liens, they only attached to your house if the creditor actually takes the judgment and records it with the Utah County Recorder. With these, I cannot claim that extra $12,000 in realtor’s fees if I try to strip them.
If the home is worth less than $211,000 I can strip or remove those judgment liens. That way, if you sell or refinance one day, they never get paid because they are no longer attached.
If the home is worth more than $211,000, the liens could stay attached and would eventually get paid when you sell/refinance.
Judgments that attached and became judgment liens
Here are the judgments that actually filed with the Utah County Recorder and became judgment liens (much less than we thought)
$502.87 Bonneville, attached on 10/16/2017
$6,324.45 Cavalry SPV, attached on 12/13/2018
$1,771.71 Midland, attached 1/29/2019
Judgments that are not attached and are not judgment liens
Here are the judgments that did NOT become judgment liens. These are NOT attached to the home.
Discover — they attached a $12,000 lien on 7/31/2017 and then released it on 11/18/2019 even though they shouldn’t have
Barclays for $8k
Cherrington for $3.5k
What this means is that if the home is worth over $211,000, then Bonneville attaches to the next $502.87 of value, then Cavalry to the next $6,324.34 of value, and then Midland for the next $1,771.71 of value.
As I said, it’s complicated.
Remember: even if a creditor get a judgment again you, it does not automatically attach to your home (here in Utah). After getting the judgment, the creditor still has to go file it with the County Recorder to create a judicial lien against you home.