IF YOU are facing a mountain of debt, I know the stress can be overwhelming. Perhaps you’re tired of the collection calls and the daily harassment by obnoxious bill collectors who make you feel like a criminal. You may feel tempted to just ignore the problem hoping that at some point your creditors will simply give up and go away. But this is probably the worst thing that you can do in such a situation. What you need to do is to find out what options you have available so that you can plan ahead before your creditors take more aggressive actions such as filing a lawsuit, judgment, levying on your bank accounts or recording a judgment lien against your home. In this article, I want to focus on judgment liens that can attach to your home if you are being sued by a creditor.
If your situation has become an emergency due to a lawsuit filed, an inevitable judgment, bank levy or a wage garnishment, in most cases, filing bankruptcy may be your only option in order to IMMEDIATELY protect your home, your wages and other assets. I realize that a lot of people will hold off on filing bankruptcy until the last minute because they want this to be their last option and this is perfectly understandable. The problem with waiting too long to take action, however, is that in the process, important legal rights may be lost. And even worse, in certain cases, a very important and valued asset such as your home may be in jeopardy. Let the story I’m about to share with you below be an important lesson you can learn from.
I have a client who I believe waited too long to file bankruptcy in order to get a debt wiped out. The judgment was from a 2nd mortgage holder of another property which foreclosed more than a year ago. The lender sued for more than $80,000, obtained a judgment and recorded a lien against his residence. His home has more than $250,000 in equity. In some cases, you can remove a lien after filing for bankruptcy to the extent that it impairs a legal exemption. In his case, however, removing the lien was impossible even after filing bankruptcy because the property had more than enough equity to protect his homestead exemption and still satisfy the $80,000 judgment lien. (State homestead exemption laws exist to protect a certain amount of your equity in a primary residence. In this case, this particular client’s exempt amount is $100,000. See a bankruptcy lawyer who can explain to you how this works and how much of your home equity is exempt from creditor attachment if you’ve been sued.). Thus, the bankruptcy discharged his personal liability but the $80,000 lien could not be legally removed from the property. Had he filed bankruptcy sooner, this could have EASILY been avoided. Now, it is simply too late.
I asked him why he didn’t consult with a bankruptcy attorney sooner and he told me that for a long time, he was confused about his options in dealing with his debts. He also had more than $60,000 in credit card debts. A family member advised him to stay away from bankruptcy and instead negotiate his debts through a debt settlement company. Of course, the debt settlement company was quick on promising him that all this debts would be paid in four years and all he had to do was pay them $600 per month. As it turned out, however, after a year of paying, the debt settlement company was only able to settle two small debts of less than $5,000. A number of creditors have also filed lawsuits in order to garnish his and his wife’s wages. In desperation, he came to our office to seek bankruptcy advice.
Debt problems can only get worse over time if you don’t do something about them while you still have the chance. If there is a way to avoid bankruptcy, you should still speak with a bankruptcy attorney who can help you understand all the legal aspects of your situation and point you in the right direction. Don’t simply rely on what friends and family tell you. And before you hire a debt settlement company, make sure that you understand what you’re getting into before handing over your hard-earned money. A lot of unscrupulous debt settlement companies are only interested in taking your money and making promises that they can’t deliver.
Call toll-free 1-866-477-7772 to schedule a free consultation with our law firm. We have offices in Glendale, Cerritos, West Covina and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published October 20, 2010 in Asian Journal Los Angeles p. B2 )
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