This article relates to an unsecured creditor in connection with credit card debt. The bank may sue an individual who is in default with credit card debt. If the bank is victorious in court, after a trial or by default, the court enters a judgment against the defendant. According to bankruptcy law, a judgment without any additional action, is nothing more than a debt that is due to a creditor, without a judgment.
However, after obtaining a judgment, the bank can file the judgment in Trenton, which creates a lien against real estate. The filing would result in a lien against the defendant’s real estate, only. If the debtor does not own any real estate, the lien is ineffective. Also, if the defendant has no equity or a limited amount of equity in their real estate, the debtor may be permitted to eliminate or strip the lien from the real estate, by filing a separate motion with the bankruptcy court.
The debtor may be entitled to reduce the lien amount that is attached to the property, based on the equity of his real estate. Under certain circumstances, the amount of the lien reduction is commensurate, with the amount of equity. In the event that the debtor maintains substantial equity in his real estate, the debtor may not be permitted to reduce any amount of the lien.
Typically, if an individual is not under the protection of the bankruptcy court, the lien would attach to the individual and the property that he owns. This means that a defendant who has a lien and owns real estate, must pay the lien at the sale of the property. Also, a person that has a lien must pay the lien at the time of purchasing property.
Under all circumstances, the lien will never attach to real estate acquired after completion of the bankruptcy case. The only amount of the lien that must be paid after the completion of the bankruptcy case, is the amount of the lien that the debtor was unable to eliminate in bankruptcy. However, the creditor may be paid from the sales’ proceeds in the amount of the lien balance, if any. After discharge, the judgment creditor may not sue the debtor personally for any debt.
Please contact New Jersey Bankruptcy Expert Robert Manchel at 866.503.5655 for a free consultation regarding your options for seeking bankruptcy protection.