Removing a lien from real estate through bankruptcy
Liens on real estate can hold up closings and prevent refinancing. A lien secures a debt, much like a mortgage secures a loan. Liens can be created for unpaid taxes, services (e.g. a mechanic’s lien or water and sewer charges), or from a judgment in a lawsuit.
In Massachusetts, a lien from a judgment in a lawsuit is called an execution. The execution secures the amount that was awarded to the plaintiff. Credit card companies (Citibank, Capital One for example) and debt buyers (Midland Funding also as an example) commonly record executions after receiving a judgment.
There are only a few ways for a defendant to remove an execution in Massachusetts. One option is to pay the creditor/plaintiff the amount owed on the execution, or if they agree to it, a lesser amount. Another option is if the judgment it secures can be vacated (i.e. thrown out), then the execution can be released (however, this does not make the debt necessarily go away, since the creditor might be able to re-file the lawsuit). A third option is to have the lien avoided in a bankruptcy.
When a homeowner files for bankruptcy in Massachusetts, he or she can claim a homestead exemption that protects between $125,000 and$500,000 in equity in their personal residence. The Bankruptcy Code allows filers to avoid (or remove) judicial liens like executions that impair this exemption. Once avoided, the lien can be cleared from the title by recording or registering orders from the bankruptcy case. If you have an execution affecting the title to your property, I would be happy to discuss whether bankruptcy is worth pursuing to remove that lien.
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