Judgement Liens Oklahoma Bankruptcy

Forgiving Judgement Liens Oklahoma Bankruptcy

For many people considering filing for bankruptcy, the catalyst is being sued by a creditor.  For creditors who have exhausted all other collection options, filing and winning a lawsuit gives them powerful tools to use against the debtor as a “judgment creditor”.  The two most widely used, and most concerning for debtors, are garnishment and judgment liens. Judgement liens and Oklahoma bankruptcy go hand in hand. Many times judgement liens are what causes the bankruptcy and the bankruptcy will discharge most if not all judgement liens.

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 a judgment creditor believes that the debtor has funds with a particular bank, be it in checking, savings, or some other type of account, the judgment creditor will send a request to the bank to confirm whether or not those funds exist.  The bank is required to comply with this request and answer truthfully.  If funds do exist, the creditor can then take 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 a judgment creditor knows that the debtor is employed, the creditor can use a similar type of request as with a bank garnishment, only this one is directed at the debtor’s employer.  This “request” is actually an order from the court directed at the employer to withhold a portion of the debtor’s net pay, up to 25%, and pay it directly to the creditor each pay period until the judgment is satisfied.  The employer must comply with the order and must set aside the funds specified by the court.  Furthermore, this is ongoing.  The creditor is not required to file a new garnishment with every paycheck, though they would be required to file one with a new employer if the debtor switched jobs.

The other tool that judgment creditors get access to is a judgment lien.  A judgment lien is a fall back measure that can insure the creditor is eventually paid, 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”.  What that means is that the property cannot be sold to another buyer without first satisfying the judgment, as a real estate transaction can’t occur without clear title.   That way, even if the creditor cannot collect through garnishments, they can still collect when the property is eventually sold.

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, though it should be noted that for a non-dischargeable debt, the cut off only lasts during the pendency of the bankruptcy, 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 funds were legally collected and 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).

Judgment liens can be dealt with in bankruptcy as well, assuming the debt is dischargeable, but it requires an additional process.  While the bankruptcy may discharge the debt underlying the lien, it does not, on its own, remove the lien.  For that to take place, a “motion to avoid lien” must be filed.  The most critical step in filing a motion to avoid lien is determining that one needs to be filed in the first place.  Therefore, it is strongly advised that any potential bankruptcy candidate who owns real estate contacts their county land records office to check whether any liens (other than an authorized lien, like a mortgage) have been placed against the property.  By knowing that a motion to avoid lien needs to be filed during the initial bankruptcy proceedings, debtors can save a great deal of time and money by avoiding having to reopen the bankruptcy years later to remove the lien before sale of 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 can be avoided in bankruptcy.

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Judgement Liens Oklahoma Bankruptcy

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