Removing Liens on Household Goods through Bankruptcy
Are you considering filing bankruptcy, but concerned some of your personal possession could be taken by a creditor? There are lots of companies that offer you quick loans in return for a “security interest” in your personal possessions, like your TV or your computer. These companies will threaten to take the property if you don’t pay them. Can bankruptcy help?
Absolutely! When you file a Chapter 7 Bankruptcy, we can most likely remove these liens against your personal property and guarantee that they cannot be taken by the creditor. 11 U.S.C 522 (f)(1)(B) provides us with the express authority to remove these types of liens and ensure your property cannot be taken by the creditor. To remove the lien, 3 conditions must first be met.
First, the lien must be non-possessory. This simply means that you still retain possession of the property.
Second, the security interest must be a non-purchase money security interest. This is a fancy way of saying that you did not buy the property in question with the loan. Rather, you owned the property before the loan was taken out and used the property to secure the loan.
Third, the lien must impair an exemption you are entitled to claim on household goods and furnishings, tools of the trade, or prescribed medical devices.
In most cases, we will be able to remove these liens and you won’t have to worry about your property being taken after the case is filed. Make sure you speak with an experienced bankruptcy attorney to ensure that any household liens you have are properly being avoided.