Massachusetts Bankruptcy Law: How to Deal with Judgment Liens

Understanding Massachusetts bankruptcy law is essential for navigating financial difficulties, especially when dealing with judgment liens. A judgment lien is a legal claim against your property that a creditor can impose after securing a court judgment in their favor. When you file for bankruptcy, you may encounter specific challenges related to these liens.

In Massachusetts, when a creditor obtains a court judgment against you, they can record that judgment with the local registry of deeds. This process creates a lien on any real estate you own in the county, effectively giving the creditor a claim to your property. If you are considering bankruptcy as a means of addressing your debts, it’s important to understand how these liens will be affected.

There are two primary types of bankruptcy available in Massachusetts: Chapter 7 and Chapter 13. Each chapter handles judgment liens differently:

Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, eligible individuals can discharge most unsecured debts, freeing them from the obligation to pay those debts. However, judgment liens on your property are not automatically eliminated upon filing for Chapter 7. The lien still exists, which means the creditor maintains a claim on your property even after your debts are discharged.

To address judgment liens in Chapter 7, debtors often seek to “avoid” the lien. This process involves filing a motion with the bankruptcy court to have the lien removed, arguing that it impairs your exemption in your property. If successful, this can provide significant relief, allowing you to retain ownership of your home or other property free from the lien.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as a wage earner's plan, allows individuals to repay some or all of their debts over a three to five-year period. Unlike Chapter 7, Chapter 13 can be beneficial in dealing with judgment liens. When you file for Chapter 13, the judgment lien is included in your repayment plan.

During the repayment period, you can potentially negotiate the terms of the lien, making it more manageable. Additionally, if you fully complete your Chapter 13 plan, any remaining unsecured debts—including unpaid judgment liens—may be discharged. This offers a path to resolving debt while keeping your property protected.

Exemptions and Protections

Massachusetts law provides specific exemptions that can protect your property from creditors, including some liens. Understanding these exemptions is crucial in a bankruptcy case. For instance, in Massachusetts, a homeowner may keep a certain amount of equity in their primary residence, which can be shielded from judgment liens. This is particularly important when considering what assets you need to protect during bankruptcy proceedings.

Consulting a Bankruptcy Attorney

Given the complexities of Massachusetts bankruptcy law, particularly regarding judgment liens, seeking legal advice from an experienced bankruptcy attorney is highly recommended. An attorney can guide you through the process, help you understand your options, and represent your interests in court. They can also assist in preparing the appropriate documents to avoid judgment liens and negotiate with creditors on your behalf.

In summary, dealing with judgment liens under Massachusetts bankruptcy law requires a nuanced understanding of how various bankruptcy chapters function. Whether you are filing for Chapter 7 or Chapter 13, it’s crucial to address these liens strategically to protect your property and achieve a fresh financial start.