In Florida, there has been a lot of confusion about whether people can avoid judgment liens on their property in bankruptcy. The law has been unclear for a long time, and there have been different opinions from judges. It’s important for bankruptcy lawyers to understand this issue and how it could affect their clients. The new Bankruptcy Code has added some new issues to the mix, so it’s important for lawyers to stay updated on any changes. Two recent bankruptcy court decisions in Florida said that a person who files for bankruptcy can’t get rid of a lien on their home, even if it’s supposed to be a “homestead” exempt property. One of the cases overturned a previous ruling by a judge, and the other case was in disagreement with a different ruling. The court said that the lien didn’t really affect the person’s ability to claim the house as “exempt” or protect it from creditors, so it wasn’t considered a problem. This decision is not very common in Florida. The argument is about whether a judgment lien can be attached to someone’s home during bankruptcy in Florida. The minority opinion says the lien can’t be avoided because it doesn’t exist under Florida law. This creates problems for people who want to clear their title after bankruptcy. Before this decision, the bankruptcy court could easily remove the lien, but now it’s more difficult. This has caused a divide between title companies and property owners. It used to be easier for people to clear their title after bankruptcy, but now it’s more complicated. The majority opinion in Florida is that a judgment lien on a homestead property can cloud the title and affect the homeowner’s exemption. This means that if a creditor has a lien on your property, it can cause issues when you try to sell or refinance your home. Creditors may try to collect on the lien even after a bankruptcy discharge, which is not allowed. It’s important to be aware of these issues and seek legal advice if you have a judgment lien on your property. The Cannon court decision limits attorneys’ ability to use a certain type of legal order to protect their client’s property from a judgment. The decision says that the judgment cannot affect the client’s ability to claim their home as exempt from the judgment, and it has no legal effect. Attorneys can try to use this decision to argue against the judgment affecting their client’s property. However, it may be difficult to get a court to agree to this. The new Bankruptcy Code in Florida limits the amount of home equity that can be protected from creditors. If you buy a new home and file for bankruptcy within 1,215 days, the exemption is limited to $125,000. This means that if your home is worth more than that, a creditor can place a lien on the remaining amount. This has caused a debate in the courts about whether the lien can be avoided for the entire amount or just the exempt portion. The outcome will depend on the court’s decision and could result in different scenarios for debtors. The important takeaway from this text is that there are different laws in different districts about whether a judgment lien can be removed from a person’s homestead (their main residence). To avoid the uncertainty, it’s best to start a legal action under Florida law as soon as possible. This action can create financial hurdles for the creditor, making it unlikely that they will want to keep the lien on the property. Overall, it’s best to use Florida law to remove the lien from the property instead of relying on a federal bankruptcy law. In Florida, there are rules about protecting your home from being sold to pay off debts. The law says that if you have a certain amount of land, your home is protected from being forced to be sold to pay off debts. This protection is still in place even if there are legal claims or debts against the home. Section 222.01 says that if you want to protect your home from being taken away, you have to fill out a form and get it recorded in the court. It takes 45 days for them to respond to your form, but sometimes the title company threatens to take your money after only 30 days. Some court cases have cited this section, like In re Thornton and In re Watson. In these cases, the courts have agreed that a homeowner can use a law called Section 522(f) of the Bankruptcy Code to get rid of a judgment lien on their house. This lien can make it hard for the homeowner to sell or refinance their home, even if the lien is not actually being enforced. The courts say that this kind of lien impairs the homeowner’s right to keep their home safe from creditors, as guaranteed by the Florida Constitution. So, the homeowner can use Section 522(f) to remove the lien and protect their home. The creditor can’t ask for more money than what is agreed in the bankruptcy plan. If they try to do that, they could get in trouble. There are specific laws and regulations that protect the debtor in bankruptcy. The amount of money that can be protected in bankruptcy varies from state to state. Some states allow a lot of money to be protected, while others have lower limits. It’s important to know the laws in your state if you are filing for bankruptcy. If a trustee gives up on trying to sell a property, it goes back to the person who originally owned it. Some judges might agree to remove liens from a home, but it’s not clear if they would change their minds based on a new court decision. If a lienholder doesn’t take legal action within a certain time frame, their lien might not be valid on a person’s property. And trying to enforce a lien on a property after a bankruptcy case has started could be against the law. If someone claims a property as their homestead and no one objects within 30 days, the court might consider it to be their homestead.
Source: https://www.floridabar.org/the-florida-bar-journal/section-522f-forward-to-the-past-or-back-to-the-future/
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