Each year, thousands of people file for bankruptcy in Oklahoma City. But the pandemic has made things worse, with many of us feeling the financial strain. So, many have chosen the bankruptcy route with the hope that it would wipe out their debts.

But remember, even if you decide to run to bankruptcy in Oklahoma City, you should also think about removing any liens on your property. You could still lose the property if the creditor has a lien on it because the debt discharge does not eliminate property liens. It is, therefore, essential to inform your Oklahoma City bankruptcy lawyers about any liens on your property, as this information isn’t always available to your OKC bankruptcy lawyer.

What Is a Property Lien?

“Lien” is a legal term that refers to the right to maintain possession of a property that belongs to someone else until the person has cleared off the owed debt. Creditors often want to minimize the financial risk of lending you huge loans by requiring you to give that property you’re buying a lien.

One way borrowers provide creditors with a lien is by signing a mortgage or deed of trust. This lien gives the creditor a legal interest to claim the asset, sell it and use the money to pay the remaining debt. As a debtor, you can agree to a lien, but not always – and this is important in bankruptcy.

What Are the Different Types of Liens?

The type of lien will determine whether or not you’ll be able to eliminate a lien in either Chapter 7 or Chapter 13 bankruptcy. The three different types of lien include:

Consensual/Voluntary Lien

Here, the debtor consents to the lien, e.g., in a mortgage or car loan. The lender then earns the creditor rights to foreclose or repossess the property if the borrower doesn’t meet the conditions of the contract.

Involuntary Statutory Lien

This type of lien is obtained by the operation of state or federal laws. Here, neither the borrower nor creditor consents to the lien. But the creditor has the right to recover the debt. An example of an involuntary statutory lien is a tax lien, which can’t be eliminated through the bankruptcy process.

Involuntary Judgment/Judicial Lien

A judgment lien is granted if a creditor takes the debtor to court, wins, and is given the title to the debtor’s property. Once the court certifies the judgment lien, the debtor is required to forfeit the property.

Which Liens Might I Be Able to Remove from My Property?

A lien must qualify for removal, and you should also request for elimination by filing a motion.

Successful elimination of a line will depend on:

· The lien type

· Whether you’re pursuing Chapter 7 or Chapter 13 bankruptcy,

· When you bought the property, and

· If you can protect the property equity with a bankruptcy exemption

Your liens and judgments attorney in Oklahoma City will look at these factors before advising you on the best way forward.

Nonetheless, you may be able to eliminate;

· Judicial/judgment liens, and

· Non-purchase money-nonpossessory liens, e.g., household goods

Remember, you won’t be able to eliminate statutory liens and any voluntary liens on your home, car, or mortgage in a Chapter 7 bankruptcy.

How Do I Eliminate a Lien from My Property?

Since a lien will prevent you from selling your property until you repay your debt, you may want to know some of the ways to eliminate a lien from your Oklahoma City property.

Our liens and judgments attorney in Oklahoma City advises you to consider the options below.

1. Pay Off Your Debt

Your creditor will agree to remove the lien if you pay off your debt. Once you’ve repaid, you should file a Release of Lien form, which then becomes a public record that the debt has been repaid.

2. Request The Court to Remove the Lien

If you think the creditor acquired the lien through bad faith, fraud, coercion, or any other illegal means, you may be able to win the lawsuit and get the lien removed. It’s also possible to eliminate a lien attached to a valid debt, which the creditor got through irregular legal procedures.

3. Allow The Statute of Limitations to Expire

This period before a lien expires varies depends on the state and the type of line. In Oklahoma, a judgment lien will remain attached to a debtor’s property for five years. However, remember that creditors may still renew their lien.

4. Confirm The Debt Is Valid

If you have reason to believe the debt the lien represents is invalid, you may want to talk to a liens & judgments attorney in Oklahoma City immediately.

5. File for Chapter 7 Bankruptcy

A Chapter 7 bankruptcy can eliminate a judgment lien in Oklahoma City. Since it can only be enforceable for a limited period, it’s best to work closely with your Chapter 7 bankruptcy attorney in Oklahoma City. This Chapter can also help you avoid or eliminate non-possessory, non-purchase money security interest in household property.

6. Negotiate with Your Creditor

A settlement is possible if both parties can agree. You can consent to make a partial payment and request the creditor to release the lien. You can use an OKC liens lawyer to help you in the mediation or arbitration process.

Can I Eliminate Liens After Filing for Bankruptcy?

A lien won’t be removed even if you file for bankruptcy in Oklahoma. Whether you want to file a Chapter 7 or Chapter 13 bankruptcy, you’ll first need to file the motion to avoid the lien, allow certain notices to go out, and wait for orders removing the lien.

Lien Release Attorneys Helping OKC Residents Through Bankruptcy

Filing shouldn’t be difficult. But a lien on your property can frustrate your efforts. And embarking on this journey towards financial freedom without a skilled and experienced OKC bankruptcy attorney can make it more stressful and complicated.

A liens and judgments attorney’s job is to help you understand Oklahoma’s laws regarding property liens, review the lien, the terms, and the best course of action. At Mitchell & Hammond, we will also help you complete any necessary filings and represent you in court.

Our job is to unfree your property, get you through the bankruptcy process, and help you regain control over your finances. Schedule a FREE case evaluation with us by calling 405-216-0007 today.