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Bankruptcy Alphabet A-Z – J is for Judgment Lien

by Dorota Trzeciecka on May 30th, 2012

In Florida, judgment lien arises when a creditor sues you and obtains a money judgment against you.   If you do not pay the judgment, the judgment creditor will then file the recorded judgment  with the Florida Department of State, Division of Corporation.  By filing, the judgment creditor creates a lien on your real property and, in some cases, on your personal property.  The judgment lien is valid for 10 years. It can then be renewed for additional 10 years.  What does it mean for you, the debtor?   The lien creates a cloud on the title to real or personal property that you owe.  The creditor can’t force you to sell the property, but in order to sell the property, you have to first satisfy the lien to give the buyer of the property a clear title.

Such lien can be avoided in bankruptcy in a proceeding called “lien avoidance”.  The judgment lien can be avoided if:

  • it is a judicial lien;
  • you can claim the property as exempt;
  • and the lien would deprive you of your full exemption.

You can bring lien avoidance action in Chapter 7 or Chapter 13.  If you successfully use lien avoidance to remove the lien in Chapter 7, you get to keep the property free and clear without paying anything to the creditor.  If you successfully use lien avoidance to remove the lien in Chapter 13, you will not have to pay it under your plan in Chapter 13.  Different rules apply to statutory and tax liens.  For example, if the IRS recorded a lien against your property for back taxes, or a contractor has placed a mechanic’s lien on your property for the work that you did not pay for, you cannot discharge them in Chapter 7, or in Chapter 13, unless your chapter 13 plan provides for payment of these liens in full.