Diane L. Drain

In Arizona, once a judgment is filed with the County Recorder’s Office it attaches to all the property you own, with the exception of exempt property.  With this judgment lien the creditor has the ability seize non-exempt property.  This seizure includes garnishing your wages or bank accounts.  The creditor could also just wait for you to sell real property (not your homestead) and then demand payment.  The judgment lien will continue to show up on your credit report as long as it remains unpaid.  This judgment lien could result in a lender refusing to finance a home or car.

The discharge does not remove the judgment lien which was recorded at the County Recorder’s Office.

In order to clean up the records you need to ask the Bankruptcy Court for an order avoiding the judicial lien.

judicial lienA bankruptcy will offer some protection.  Understand that when a bankruptcy is filed the creditors are prohibited in pursuing you (with a couple of exceptions – child support for instance).   The bankruptcy also prohibits your creditors in seizing assets (house or car) without a Bankruptcy Court order (usually called Order for Relief from the Automatic Stay).  Once the bankruptcy is completed, your personal liability for repayment of the debt is discharged.  In other words, the creditors cannot demand payment, but they do have the right to repossess any collateral that they have a lien on, such as a loan on a home or vehicle.

The discharge does not remove the judgment which was recorded at the County Recorder’s Office.  This assumes the recording was done before the bankruptcy was filed in order to be permitted.   Although the bankruptcy discharge prohibits the creditor suing the judgment remains on the County Recorder’s records.  In order to clean up the records you need to ask the Bankruptcy Court for an order avoiding the judicial lien.   If the property is exempt under the law the state law then you can avoid the lien using Section 522 of the U.S. Bankruptcy Code.

One point to note is that the lien must be a judicial or a non-possessory lien, non-purchase money security interest in household goods or tools of the trade.  Tax liens can’t be avoided in a Chapter 7 bankruptcy.

So, you will receive a discharge of your obligations if you comply with the bankruptcy processes and rules. According to http://www.baizlaw.com/practice-areas/medical-malpractice, if you obtain an Order avoiding the judicial lien then you will be putting yourself in a better position for the future when you want to finance a home or vehicle.  Your attorney will charge you an additional fee for the motion, but it is well worth it when planning for your future.

We have several videos on our web site.  Below are a few that might be of interest:

  • “Arizona Exemptions”
  • “What is a Bankruptcy Discharge?”
  • “Should I keep my home or let it go into foreclosure?”
  • “Meet Ms. Drain and Suggestions on How to Hire an Attorney”

Bankruptcy is like a multi-layer cake.  You can stop at the first layer and be satisfied, but for your future peace of mind you may be better off by going to the third or fourth layer.  You will never know how many layers you need unless you talk to an experienced bankruptcy attorney.  I offer free consultations.  You will never be farmed out to someone in India or a paralegal service.  Jay and I are here to help whenever you call.