Homeowners filing bankruptcy in New Jersey have to take a couple extra steps in their case if a creditor enters a judgment against them as a result of a lawsuit. The debt itself can still be discharged (wiped out), but the judgment creates a lien against any real estate you own, like your home.
People in bankruptcy are allowed to keep assets that do not have a net value over and above a fixed amount called an "exemption." Therefore, if the judgment lien is "sitting" on that equity, it "impairs" your ability to enjoy the benefit of that exemption. This means that if you do not have any more equity in your house than you can legitimately exempt, you can "avoid" the judgment lien.
You should bear in mind, though, that the "avoiding" of that lien requires an extra step in your bankruptcy for which many attorneys charge an extra fee. Thus waiting until a judgment is entered could end up costing you more money to file bankruptcy.
The lien can also be removed after the bankruptcy is over. There is a procedure for bringing an action in New Jersey court for removing the judgment from the court docket. However, you have to wait at least a year after discharge to do this.
So What Do I Do?
If you live in southern New Jersey, your debt is beyond your ability to handle to the point where your creditors are starting to sue you, and you are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you are looking for more information about bankruptcy,then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.