Consumer Bankruptcy Journal Summer 2017 | Page 13

SECURED DEBTS Spending the sales proceeds without the lender’s permission may be a form of fraud creating a debt which is not dischargeable under 11 U.S. C. 523. Involuntary liens Judicial liens Judgment liens are created by law, in favor of the winning party in a lawsuit. Usually a judgment does not, in and of itself, give the judgment creditor a lien. The creditor must usually take an addition step of filing or recording the judgment with the designated agency to create a lien on the judgment debtor’s property. In California, recording an abstract of judgment with the County Recorder gives the judgment creditor a lien on all the debtor’s real estate in the county. Recording notice of the judgment with the Secretary of State gives the judgment creditor a lien on all the debtor’s personal property. Check the laws of your state to determine how judgment liens are perfected. Get a report of liens on file with the secretary of state to know what liens are perfected, and the seniority of each lien. In analyzing a debtor’s situation for bankruptcy planning, it is important to know if judgment liens have been perfected, since secured debts are totaled separately from unsecured debts in calculating the debtor’s eligibility for Chapter 13. impair exemptions; in Chapter 13 they can be stripped down to the value of the assets to which the lien attaches. Tax liens The recordation of a tax lien perfects a lien on all of the taxpayer’s property, real and personal. It may attach even to retirement savings and 401(k) plans that are beyond the reach of other creditors. It is a statutory lien, so cannot be avoided in bankruptcy like judicial liens that impair an exemption. Tax liens can be stripped off in Chapter 13 if there is no equity in the property for the lien to attach to. Judgment liens may be avoided if they Rediscover the lost art of human interaction. Solo and small firm clients don’t want to talk to a machine. Which is why firms like yours rely on Ruby, the highly trained team of offsite receptionists who handle all your calls with the perfect mix of friendliness and professionalism. 866-611-RUBY (7829) or visit callruby.com/nacba National Association of Consumer Bankruptcy Attorneys Summer 2017 CONSUMER BANKRUPTCY JOURNAL 13