Bankruptcy can prevent future judgment liens. It usually stops a lawsuit from turning into a judgment, and then a judgment lien on your home.
A creditor may ask the bankruptcy court to let another court finish a lawsuit about liability and/or the amount of damages.
Sometimes it's in your best interest to force an issue in bankruptcy court by, in effect, suing a creditor in an adversary proceeding.
Statutory liens survive bankruptcy. Chapter 7 may still be able to help in various ways and be your best solution.
Here's an example showing why a judgment lien on your home is dangerous, and how bankruptcy can solve this problem.
Bankruptcy can do more than forever discharge your debts. It can undo some bad creditor actions, like a recorded judgment lien on your home.
A judgment lien effectively converts a debt that was secured by nothing into one secured by your home.
If you injured someone by unlawfully driving while intoxicated, the resulting obligation can't be discharged in bankruptcy.
A judgment lien turns an unsecured debt into one secured by a lien on your home. Bankruptcy can undo that, and write off the debt.
Because of Chapter 13's much more powerful automatic stay, its ability to prevent judgment liens and tax liens is extremely valuable.
Creditors with secured debts often have much more leverage against you than with unsecured debts.
Letting a creditor get a judgment against you is dangerous, for a lot of reasons. One of the biggest dangers is a judgment lien on your home.
Bankruptcy can't get rid of most creditor liens on what you own. But judgment liens on your home are an exception.
A judgment lien puts a cloud on the title to your home. Bankruptcy can often get rid of the underlying debt and the judgment lien as well.
Federal bankruptcy laws override state collection laws, protecting you and your assets from debt collection.