Judgement Liens Oklahoma Bankruptcy

Judgement Liens Oklahoma BankruptcyFor those considering bankruptcy, a lawsuit from a creditor is the catalyst. For creditors who’ve exhausted all other collection options, filing and winning a lawsuit gives them powerful tools against the debtor. This tool is called a “judgment creditor”. Once the creditor gets their Judgement Lien the collection efforts will begin in earnest. The two most widely used, and most concerning for debtors, are garnishment and judgment liens. Judgement Liens Oklahoma Bankruptcy usually proceed filing your case and usually cause the bankruptcy. Many times judgement liens are what causes the bankruptcy. Fortunately bankruptcy will forgive most if not all judgement liens.

Types of Garnishments:

Garnishments come in two forms: bank garnishments and wage garnishments. A bank garnishment occurs when a judgment creditor takes funds directly from the debtor’s bank accounts. If creditors believe the debtor has funds with a bank, be it in checking, savings, or some other type of account, the judgment creditor will send a request to the bank. This request is sent to confirm whether or not those funds exist. The bank legally must comply with this request and answer truthfully. If funds exist, the creditor takes from those funds until they are exhausted, or the judgment is satisfied. The only silver lining for a debtor is that these requests are singular events. The judgment creditor must make a new request every time they wish to seek funds from a bank account in this manner.

That is not the case with wage garnishments. If the creditor uses a similar type of request as with a bank garnishment. Conversely, this one is directed at the debtor’s employer. This “request” is actually an order from the court directed at the employer. It withholds up to 25% of the debtor’s net pay until the creditors receive their portion. The employer must comply with the order and must set aside the funds specified by the court. Furthermore, this is ongoing. The creditor does not have to file a new garnishment with every paycheck. Though they are required to file one with a new employer if the debtor switched jobs.

Purpose of Judgement Liens:

The other tool that judgment creditors get access to is a judgment lien. A judgment lien is a fall back measure ensuring eventual payment to the creditor, even if they cannot effect a wage or bank garnishment. If the judgment creditor determines that the debtor owns real estate, be it a home, business, or empty plot of land, they can file their judgment with the appropriate county land records office. By filing their judgment, the creditor “clouds the title”. Essentially, the property cannot be sold to another buyer without first satisfying the judgment. For example, a real estate transaction can’t occur without clear title. That way, although the creditor cannot collect through garnishments, they still collect when the property is eventually sold.

Bankruptcy Eliminates Judgement Liens:

These collection methods can sound drastic and unfair to debtors. Fortunately, there is a solution for most of them in bankruptcy. As for garnishments, filing bankruptcy cuts off all future garnishment attempts. That cut off is permanent for any debt that is dischargeable. Note however, that for a non-dischargeable debt, the cut off only lasts during the pendency of the bankruptcy. Pendency is usually about 90 days. This applies to both wage and bank garnishments. Filing, however, does not force the creditor to return money garnished before the bankruptcy was filed. Those legally collected fund are rightfully the property of the creditor. Thus, it is important to file as quickly as possible when faced with a potential garnishment situation happens (ideally, before the lawsuit is even filed).

Property Liens After Bankruptcy:

Bankruptcy deals with judgment liens, assuming the debt is forgivable. However, it requires an additional process. While the bankruptcy may discharge the debt, it does not, on its own, remove the lien. A “motion to avoid lien” must be filed. The most critical step in filing a motion to avoid lien is determining that the lien exists on the property. Therefore, it is advisable that potential bankruptcy candidates who own a home contact the county land records office and view the title. By filing a “motion to avoid lien” initially, debtors save time and money. They avoid reopening the bankruptcy years later in order to remove the lien before selling the property.

Lawsuits can be a scary prospect for potential Oklahoma bankruptcy candidates, but they don’t have to be. With smart, fast action and good planning, the consequences of a creditor’s lawsuit are avoidable.