In an effort to obtain a fresh start with bankruptcy, the bankruptcy code permits a debtor to avoid certain liens on his or her assets. Liens tied to property, ie are secured, cannot be avoided because a discharge only applies to the personal liability of a debtor. However, judicial liens, that attach to an asset can sometimes be avoided under limited circumstances. If the lien impairs the value of the exemption in either a Chapter 7 or Chapter 13 bankruptcy, the lien can be avoided to the extent it impairs the value of the asset. This means, if the equity in the asset is protected by an exemption, a debtor can have the judicial lien on the asset removed or reduced depending on the value of the asset and amount of the lien.

In order to be avoidable, the lien must be a judicial lien such as a judgment or garnishment or a non possessory security interest in an asset. Tax liens can be avoided in a Chapter 13 bankruptcy under certain circumstances, however, they are not avoidable under a Chapter 7 filing. If a debtor has a lien on his or her property, it is important to determine whether the lien can be avoided. Regardless of whether the debtor is filing for bankruptcy under Chapter 7 or Chapter 13, certain liens, such as liens that secure domestic support obligations are not avoidable. 11 USC 522(f)(1)(A). A bankruptcy attorney will be able to determine whether the lien is avoidable.

Richard V. Stokan, Jr.