Prospective filers often fear bankruptcy will result in a lien on their home or property. While not all liens can be avoided, most can. If a lien is inevitable, there are ways to deal with it gracefully and successfully. Below are the basics on liens and how to handle them.
What is a Lien and Who Can Use It?
In its simplest terms, a lien is the right to take and hold the property of a person in debt to you until that debt is repaid or otherwise discharged. Seniors are vulnerable to these if they are low-income or are entering long-term nursing care while still owing debts. If a court can prove you owe money and creditors are entitled to a portion of your property, creditors can and often do place a lien on your home.
How Can I Avoid a Lien?
A Kentucky bankruptcy attorney can help you determine what in your individual situation will prevent liens. According to ptla.org and other law firms, there are several ways to prevent liens. Creditors are not allowed to place a lien on your house if:
- A minor (under 18) lives with you.
- Your spouse or a first-degree relative such as a sister or brother lives with you.
- You are over 60 and disabled.
- Someone living with you is over 60 and disabled.
- Your home equity is at least $47,500.
- Your bankruptcy file contains an exemption.
How Does Bankruptcy Help?
Filing Chapter 13 bankruptcy will guarantee you may keep your home. Chapter 13 can also help you avoid liens. Filing Chapter 7 will not protect you from all liens. However in Chapter 7, only non-essential property can be seized, which means your home and the property you need to live in reasonable comfort will be safe.