Secured Lien in Bankruptcy

Secured lien refers to the right to hold lawful possession of a particular asset or property until the owner is able to fulfill his financial obligations. In bankruptcy, avoidance of lien is the method of acquiring release of lien in a property usually connect to the list of exemptions under the Bankruptcy Code. Here are the legal action to take in order for you to avoid a lien.

Chapter 7 Bankruptcy

If you are looking into avoiding a lien, your best option would be Chapter 7. Through this type of bankruptcy, your debts are to be discharged including liens on real estate assets and vehicles. Reaffirmation or loan modification may be employed if the only lien on a property is one used for a loan that purchased that particular property so you can keep it.

Filing for Bankruptcy

To file for bankruptcy, you need to accomplish a bankruptcy petition form and matrix of creditors, which is a list of all the individuals and institutions that you owe money from. File the petition in front of the bankruptcy. Once it has been filed, there will be an automatic stay imposed by the court to prevent creditors from collecting debt payments, repossessing your properties even those that are lien, or filing lawsuit against you.

Creditor’s Meeting

It is also very important to participate in the creditor’s meeting, which is the first session held in bankruptcy cases to be conduct in front of a bankruptcy trustee. In this meeting, creditors can file objections to any discharge of the bankruptcy debt. You can also enter into a reaffirmation agreement with a lender who holds primary lien on your house or car. Secondary liens will also be discharged formally after the creditor’s meeting.

Hire an Attorney

Bankruptcy cases appear less complicated that they actually are. Do not make the mistake of thinking that it is something that is easy enough to turn into a DIY project. The truth is, it is only with the help of trustworthy and competent bankruptcy lawyer that you would be able to go through this process effectively. Your bankruptcy attorney will work to the best of his/her ability to protect your rights and that you undergo bankruptcy properly guided. You can find experienced lawyers from online directories, directories from state and local bar association, and through word of mouth. Be sure to be proactive through the entire process of bankruptcy in order for you to avoid lien. It is not wise to wait until the creditors are already foreclosing on a lien before you take the legal action necessary.