Bankruptcy offers you protection from creditors taking any further action against you, and this includes seeking a judgment against you once you’re in the process of seeking the court’s protection from creditors. However, an existing judgment against you can affect your bankruptcy filing depending on whether or not you’re a homeowner, or you are the sole owner of some other form of real estate.
If you’re a homeowner, then the situation is very different because your creditors can place a lien on your home in lieu of the debt you owe them. Once a lien is in place this then changes that debt, in the eyes of the law, from an unsecured debt into a judgment debt or a lien.
Because a bankruptcy filing typically only allows you to discharge unsecured debts, if a secured lien was brought forth against your real estate there are additional steps that must be taken to remove that lien which is now attached to your real estate.
A bankruptcy attorney should be consulted if you’re in any doubt as to what course of action to take next – it could, quite literally, save you thousands of dollars.