Stripping Judgment Liens from Your Home’s Title
If a creditor files a lawsuit against you and gets a judgment, that judgment usually attaches to your home as an involuntary lien against your home’s title, a judgment lien. If you sold or refinanced your home, that judgment would have to be paid in full, usually along with continuously accruing interest plus the creditor’s costs of litigation.
The key to avoiding a judgment lien is the homestead exemption. This exemption is a right granted to you by the state to protect a certain amount of equity in your home from your creditors. Different states’ homestead exemption laws protect different amounts of home equity. In Oregon, you can protect $40,000 of equity in a home owned by a single person, $50,000 of equity in a home owned by a husband and wife. You can only avoid judgment liens on real estate that is your homestead, generally speaking, your “actual abode.” The entire judgment lien can be “avoided”—erased off the title—if that lien “impairs,” or cuts into, your homestead exemption. It is important to speak with an experienced bankruptcy attorney in Portland to discuss this issue and any other question regarding bankruptcy law.