If I’m considering filing bankrupcy for my credit card balances but I have equity in my property, can a lien be placed on it?

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If I’m considering filing bankrupcy for my credit card balances but I have equity in my property, can a lien be placed on it?

I have a lot of credit card debt. Want to file bankruptcy but have some equity in my property. If I file, could there be a lien placed on my property to pay off my debtors?

Asked on April 23, 2011 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You should consult with a bankruptcy attorney before doing anything. There are  two different kinds of bankruptcy, with very different consequences. In brief, under Chapter 7, all your assets--including equity in property--are potentially subject to being sold in order to pay your creditors as much as possible. There are exceptions--certain property is exempt from execution in bankruptcy, and also, if there is a mortgage on the property, that takes precedence--but generally, in Chapter 7, your belongings are assets are used to pay creditors. In Chapter 13, your assets are untouched, but the court will come up with a repayment plan--a very strict, court-ordered budget--which you will have to follow for usually 5 years, to pay creditors.

Filing for bankruptcy has, as you can see, very serious consequences. You should consult  with a lawyer about the specifics of your situation to see if bankruptcy--and which kind of bankruptcy--is right for you.


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