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Removing Judgment Liens Discharged in Bankruptcy
New Jersey Real Estate Attorneys: Discharging Judgment Liens After Bankruptcy
You filed for bankruptcy and obtained a discharge of your debts, including several creditors who obtained judgments against you in the Superior Court of New Jersey. So why are your creditors’ judgments still appearing as liens against your New Jersey home?
This is a very common scenario. Many people think that a bankruptcy will, by itself, remove judgment liens and that no further action is needed. Why is this wrong?
Under New Jersey law, once a judgment is docketed in the judgment index maintained by the Clerk of the Superior Court of New Jersey in Trenton it becomes a statewide lien on any real estate owned by the judgment debtor in New Jersey. A New Jersey docketed judgment remains in the judgment index for 20 years, and can be renewed by the creditor’s timely application.
A successful personal bankruptcy case culminates with the entry of a discharge order eliminating an individual’s personal liability to repay unsecured debts, including judgments docketed in New Jersey. However, a bankruptcy discharge does not automatically remove judgments or other liens. Although a bankruptcy discharge prevents a judgment creditor form attempting to collect the debt against personal assets, the judgment lien remains attached to the debtor’s New Jersey real estate.
A procedure exists in bankruptcy court to remove a judgment lien against a debtor’s real estate pursuant to 11 U.S.C. 522(f). However, resorting to that procedure requires the filing of a separate motion in the Bankruptcy Court and the payment of additional legal fees over and above the standard fees charged for Chapter 7 or Chapter 13 bankruptcies.
Because New Jersey has its own state statute (N.J.S.A. 2A:16-49.1) that provides for discharging or cancelling a judgment following a 1-year period after a bankruptcy discharge is entered, in many instances bankruptcy lawyers will advise their clients to wait a year and apply to discharge the judgment in the original judgment case filed in New Jersey.
In some instances, some less experienced bankruptcy lawyers who merely dabble in bankruptcy are not even aware of the fact that a bankruptcy discharge doesn’t automatically remove a judgment lien. Most clients coming out a bankruptcy won’t know a problem exists until many years later when they go to sell their home and the judgment lien turns up on the title search.
Discharge Judgment Lien NJ
Since 1997 our New Jersey lawyers have been assisting individuals in removing judgment liens previously discharged in bankruptcy. If you have an old judgment lien that continues to cloud the title on your New Jersey property contact our New Jersey judgment attorneys today. One of our NJ attorneys will respond to you in 24-48 hours.