Can I File a Motion to Avoid a Judicial Lien in Colorado Years After I Filed Bankruptcy?
- You can file Chapter 7 bankruptcy in Colorado only if your average income for the six months before filing falls below the state median. If not, you can apply a means test that adjusts your income for your expenses and see if you qualify that way. In Chapter 7, a court trustee has the authority to sell off any property that isn't exempt under state law. Homes have a $60,000 exemption, for example, so unless your home is worth at least $60,000 more than the mortgage -- $90,000 if you're disabled or over 60 -- it can't be sold.
- Chapter 7 bankruptcy discharges -- wipes out -- your debts except child support, alimony, student loans and other debts federal law states survive bankruptcy. If your creditor has placed a lien on your property, Chapter 7 won't remove it unless the lien "impairs" your bankruptcy exemption. If you have a $20,000 lien and your home is worth only $40,000 more than the mortgage, the lien cuts into your exemptions, so you can ask the court to let you avoid it. If your house had $70,000 in equity, you could avoid $10,000 of the lien.
- Anyone filing bankruptcy is supposed to submit an exhaustive financial report covering debts, liens, creditors and assets. Any debts or liens that are not included in your Chapter 7 filing will not be discharged in bankruptcy. If you're still going through bankruptcy when you discover you or your attorney missed a lien, you can submit a motion to modify your filing. Even years later, bankruptcy law says, you can ask to reopen the case if "it will accord relief to the debtor." You will have to submit your motion to the state's only bankruptcy court, which is in Denver.
- The first step is to file an ex parte motion with the Denver court, requesting the judge reopen the case without a hearing first. You have to submit a $274 fee -- as of 2011 -- with the motion. If the judge agrees to reopen the case -- the law leaves it up to the judge's discretion -- file a motion to avoid the judicial lien. This will only work if the lien impairs your Colorado exemptions; If it doesn't, you won't be able to remove it, even with a reopened case.