to avoid a lien, you claim the property as exempt on schedule C, file a separate request (motion) with the bankruptcy court, and formally serve the motion on the creditor by mail.
you request lien avoidance by typing and filing a motion. it is simple and can be done without a lawyer.
in most courts, you must file your motion with the court within 30 days after you file for bankruptcy. But some courts require you to file the motion before the creditors’ meeting. Check your local rules.
If you miss the deadline, talk to a lawyer. You might not discover a lien until after the deadline passes for filing a motion. In fact, it’s not uncommon to discover liens only after a bankruptcy case is closed. If this happens to you, you can file a motion asking the court to let you proceed even though you missed the deadline, or even to reopen the case if necessary. Talk to a lawyer right away if you want to avoid a lien after the deadline has passed.
what goes in your motion papers depends on the kind of lien you’re trying to get eliminated.
Nonpossessory, Nonpurchase-Money Security Interests you will need to fill out one complete set of forms for each affected creditor—generally, each creditor holding a lien on that property. sample forms are shown below.
some courts have their own forms; if yours does, use them and adapt these instructions to fit.
Checklist of Forms for Motion to Avoid Nonpossessory, Nonpurchase-Money
Security Interest
Motion to Avoid Nonpossessory, Nonpurchase- Money Security Interest
Notice of Motion to Avoid Nonpossessory, Nonpurchase-Money Security Interest Order to Avoid Nonpossessory, Nonpurchase- Money Security Interest
Proof of Service by Mail
Step 1: if your court publishes local rules, refer to them for time limits, format of papers, and other details of a motion proceeding.
Step 2: type the top half of the pleading form (where you list your name, the court, the case number, and so on) following the examples shown below. this part of the form is known as the
“caption.” it is the same for all pleadings.
Step 3: if you’re using a computer to prepare the forms, save the caption portion and reuse it for other pleadings. if you’re using a typewriter to prepare the forms, stop when you’ve typed the caption and photocopy the page you’ve made so far, so you can reuse it for other pleadings.
Step 4: using one of the copies that you just made, start typing again just below the caption and prepare a Motion to avoid nonpossessory, nonpurchase-Money security interest, as shown in the example.
Step 5: Most courts require you only to file the motion with the court and serve the creditor with a notice explaining that the lien will be avoided by default if the creditor doesn’t respond and request a hearing. (these are colorfully called “scream or die” motions—see the sample Motion to avoid judicial lien, below, for language you can use instead of a formal notice if your district follows this procedure.) Because motions to avoid liens are usually pretty straightforward and are usually granted, many creditors don’t bother to respond. if they do, however, either you or the creditor will have to schedule a hearing.
Step 6: if a hearing is required, call the court clerk and give your name and case number. say you’d like to file a motion to avoid a lien and need to find out when and where the judge will hear arguments on your motion. under some local rules the clerk will give you a hearing date; ask for one at least 31 days in the future, because you must mail notice of your motion to the creditor at least 30 days before the hearing (unless local rules set a different time limit). write down the information. if
the clerk won’t give you the information over the phone, go to the bankruptcy court with a copy of your motion filled out. File that form and schedule the hearing. write down the information about when and where your motion will be heard by the judge.
if there will be a hearing, prepare a notice of Motion that lists the date, time, and place of the hearing. (see the sample notice of Motion to avoid nonpossessory, nonpurchase-Money security interest, below.) if you are filing in a district that requires a hearing only if the creditor requests one, use the language in the sample notice of Motion and Motion to avoid judicial lien, below, to give the creditor proper notice of this procedure.
Step 7: Prepare a proposed order to avoid nonposs- essory, nonpurchase-Money security interest.
this is the document the judge signs to grant your request. specify exactly what property the creditor has secured in the space indicated in the sample. you can get this information from the security agreement you signed. Make two extra copies, and take them with you to the hearing if there is one. the court’s local rules may require you to file the proposed order with the rest of your motion papers.
Step 8: Prepare at least two Proofs of service by Mail, one for each affected creditor and one for the trustee. these forms state that a friend or relative of yours, who is at least 18 years old and not a party to the bankruptcy, mailed your papers to the creditor(s) or the trustee. Fill in the blanks as indicated. have your friend sign and date the form at the end as shown on the sample. see “how to serve the Creditor,”
below, for more information.
Step 9: Make at least three extra copies of all forms.
Step 10: Keep the Proofs of service. have your friend mail one copy of the Motion, notice of Motion, and proposed order to each affected creditor and the trustee.
Step 11: File (in person or by mail) the original (signed) notice of Motion, Motion (and proposed
order, if required in your area), and Proof of service with the bankruptcy court.
Step 12: the trustee or creditors affected by your motion may submit a written response.
however, most courts will grant your motion if the trustee or creditor doesn’t file a response to the motion and you ask the court to enter a default judgment in your favor (see step 14, below).
Step 13: if there is a hearing, attend it. the hearing usually lasts ten minutes or less. Because you filed the motion, you argue your side first.
explain briefly how your property falls within the acceptable categories of exempt property, that the lien is a nonpossessory nonpurchase- money security interest, and that the lien impairs your exemption. (11 u.s.C. § 522(f)(2).)
“impairs your exemption” means that because of the lien, your ownership interest in this item of exempt property has been reduced.
the trustee or creditor (or an attorney) responds. the judge either decides the matter and signs your proposed order or takes it
“under advisement” and mails you the order in a few days.
Step 14: if the creditor doesn’t show up at the hearing, or if the creditor doesn’t file a response to your motion when it is required to do so (see step 12, above), file and serve a request for entry of order by default. (see the sample request with the papers for avoiding a judicial lien, below, to get an idea of what this should look like. of course, you’ll have to change the language so it refers to a nonpossessory, nonpurchase-money security interest rather than a judicial lien.) this document tells the court that you followed all of the proper procedures and gave the creditor notice of your motion, but the creditor didn’t respond as it was required to do. the request asks the court to grant your motion by default. you must prepare another Proof of service and serve this request on the creditor.
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Motion to Avoid Nonpossessory, Nonpurchase-Money Security Interest MOTION TO AVOID NONPOSSESSORY, NONPURCHASE-MONEY SECURITY INTEREST 1. Debtors [your name(s)] , filed a voluntary petition for relief under Chapter 7 of Title 11 of the United States Code on [date you filed for bankrupt- cy] . 2. This court has jurisdiction over this motion, filed pursuant to 11 U.S.C. § 522(f), to avoid a nonpossessory non- purchase-money security interest held by [name of lienhold- er] on property held by the debtor. 3. On or about [date you incurred the debt] , debtors borrowed $ [amount of loan] from [name of creditor] . As security for loan, [name of creditor] insisted upon, and the debtors executed, a note and security agreement granting to [name of creditor] a security interest in and on the debtor’s personal property, which consisted of [items held as security as they are listed in your loan agreement] which are held primarily for the family and household use of the debtors and their dependents. 4. All such possessions of debtors have been claimed as fully exempt in their bankruptcy case. 5. The money borrowed from [name of creditor] does not represent any part of the purchase money of any of the articles covered in the security agreement executed by the debtors, and all of the articles so covered remain in the pos- session of the debtors. 6. The existence of [name of creditor] ‘s lien on debtor’s household and personal goods impairs exemptions to
which the debtors would be entitled under 11 U.S.C. § 522(b). WHEREFORE, pursuant to 11 U.S.C. §522(f), debtors pray for an order avoiding the security interest intheirpersonal andhouseholdgoods,andforsuchadditionaloralternativere- liefasmaybejustandproper. Dated: Debtor in Propria Persona Dated: Debtor in Propria Persona Address 1. MotiontoAvoidNonpossessory,Nonpurchase-MoneySecurityInterest
2. MotiontoAvoidNonpossessory,Nonpurchase-MoneySecurityInterest
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Order to Avoid Nonpossessory, Nonpurchase-Money Security Interest Notice of Motion to Avoid Nonpossessory, Nonpurchase-Money Security Interest NOTICE OF MOTION TO AVOID NONPOSSESSORY, NONPURCHASE-MONEY SECURITY INTEREST Please take notice of motion set for a hearing on : [leave blank] , 20 , at o’clock .m. at [leave blank] , in courtroom
ORDER TO AVOID NONPOSSESSORY, NONPURCHASE-MONEY SECURITY INTEREST The motion of the above-named debtor(s) [ your name(s)] , to avoid the lien of the respondent, [name of creditor] , is sustained. The lien is a nonpossessory, nonpurchase-money lien that impairs the debtor’s exemptions in the following property: [list all items held as security as listed in your loan agreement] Unless debtor’s bankruptcy case is dismissed, the lien of the respondent is hereby extinguished and the lien shall not survive bankruptcy or affix to or remain enforceable against the aforementioned property of the debtor. [name of creditor] shall take all necessary steps to remove any record of the lien from the aforementioned property of the debtor. Dated: [leave blank for [leave blank for judge to sign] judge to sign] U.S. Bankruptcy Judge 1. Order to Avoid Nonpossessory, Nonpurchase-Money Security Interest
1. Notice of Motion to Avoid Nonpossessory, Nonpurchase-Money Security Interest
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Proof of Service by Mail 1. Proof of Service by MailPROOF OF SERVICE BY MAIL I, [friend’s name] , declare that : I am a resident or employed in the County of [the county where friend lives or works] , State of [state where friend lives or works] . My residence/business address is [friend’s address] . I am over the age of eighteen years and not a party to this case. On [leave blank] , 20 , I served the Notice of Motion and Motion to Avoid Judicial Lien on [creditor’s name] , by placing true and correct copies thereof enclosed in a sealed envelope with postage thereon fully prepaid in the United States Mail at [city of post ofice where papers will be mailed] , address as follows: [address of affected creditor’s and trustee] I declare under penalty of perjury that the foregoing is true and correct, and that this declaration was executed on. Dated: , 20 at City and State [leave blank] Signature
Get an attorney, if you need one. If you are having trouble figuring out how to draft the necessary paperwork to avoid a lien, think about asking a lawyer for help—especially if the lien is substantial.
How to Serve the Creditor
Under the new bankruptcy law, you must provide notice to the creditor by following these rules:
• If the creditor provided you with a contact address and a current account number within the 90 days before you filed for bankruptcy, you must use that address and include the account number and the last four digits of your Social Security or taxpayer identification number with your papers.
• If the creditor was prohibited from communi- cating with you during this 90-day period, you must use the address and account num- ber contained in the two written communi- cations you received most recently from the creditor.
• If the creditor has filed a preferred contact address with the court, you must use that address.
If your creditor is a business, you must serve a live human being who represents the creditor—you can’t just send your motion to “Visa” or “First Bank,” for example. Here’s how to find that warm body:
• Call the creditor and ask for the name and address of the person who accepts service of process for the business.
• If you don’t know how to reach the creditor, contact your state’s Secretary of State office and ask for the name and address of the person who is listed as the registered agent for service of process for the company. Many states make this information available online, too.
Judicial Lien
to eliminate a judicial lien, follow the steps to eliminate a nonpossessory, nonpurchase-money security interest, above, but use the sample notice of Motion and Motion to avoid judicial lien and order to avoid judicial lien forms as examples.
the sample forms are for eliminating a judicial lien on your home. to eliminate a lien on personal property, you will need to change the language accordingly.
Checklist of Forms for Motion to Avoid Judicial Lien
Motion to Avoid Judicial Lien or Motion to Avoid Judicial Lien (on Real Estate)
Notice of Motion to Avoid Judicial Lien Order to Avoid Judicial Lien
Proof of Service)
Request for Entry of Order by Default and Proof of Service by Mail (if the creditor doesn’t respond)
you may have to prove the value of the property in question. typically, when you file for bankruptcy and assign a value to your property, the only person who may check your figures is the trustee—and that doesn’t happen very often. however, if a creditor opposes your motion to avoid a judicial lien, the creditor can make you prove the property’s value, because the more the property is worth, the less the lien impairs the exemption. For instance, if you listed property as worth
$50,000 and the exemption is $45,000, a lien exceeding
$5,000 would impair the exemption and entitle you to have the lien removed. But if the evidence you provide at the hearing shows that the property is worth
$60,000, a lien of less than $15,000 wouldn’t impair the exemption, because you would be able to take your
$45,000 exemption and still pay the full lien. so, be prepared to show how you determined the value of your property.
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Request for Entry of Order by Default [Your Name] [Your Address] [Your Address] [Your Phone #] [Last four digits of taxpayer ID #] Debtor is Self-Represented IN THE UNITED STATES BANKRUPTCY COURT [The district where your court is located] In the Matter of)Case No: [Enter your Case #] ) [Your Name],)Chapter 7 ) Debtor) ) ) REQUEST FOR ENTRY OF ORDER BY DEFAULT Now comes debtor [your name], who declares and says under penalty of perjury this [day, month, year] at [your city and state] that the following statements are true and correct: 1.On [date], Debtor [your name] caused a Notice of Motion and Motion to Avoid Judicial Lien on Real Estate to be served on [name of person motion was served on]. 2.A copy of the Notice of Motion and Motion and a pro- posed order are attached to this request. Also attached is a Proof of Service of this request on [name of person motion was served on], the trustee, and the U.S. Trustee. 3.The trustee and the U.S. Trustee were also served with the Notice of Motion and Motion to Avoid Lien on [date trustee and U.S. Trustee were served].
4.A proof of service duly executed by [name of person who served your notice of motion and motion] as to service of the Notice of Motion and Motion is on file with the court. 5.The Notice of Motion and Motion complies in all respects with Bankruptcy Local Rule [number of rule you used to provide Notice of Motion] of the United States Bankruptcy Court for the [name of court’s district] 6.The debtor has received no response from any of the served parties as of [current date], 21 days after the service of the Notice of Motion and Motion. WHEREFORE,DebtorrespectfullyrequeststhattheCourtenter bydefaulttheattachedOrdertoAvoidJudicialLienonReal Estate. Date:[current date] Signed:[your name] PROOF OF SERVICE BY MAIL (Bankruptcy Rule 7004) I, [name of process server], declare that I am a resident of or employed in the [county and state]. My address is [process server’s address]. I am over the age of eighteen years of age and am not a party to this case. On [date of service by mail], I served the Notice of Motion and Motion to Avoid Judicial Lien on Real Estate on the following parties by placing true and correct copies thereof enclosed in a sealed envelope with postage thereon fully prepaid, in the United States Mail at [city and state] addressed as follows: 1. Request for Entry of Order by Default 2. Request for Entry of Order by Default
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Request for Entry of Order by Default, continued [name and address of person served on behalf of lien owner] [name and address of trustee] [name and address of U.S. Trustee] I declare under penalty of perjury that the foregoing is true and correct, and that this declaration was executed on [date Declaration signed by process server]. [signature of process server] 3. Request for Entry of Order by Default
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Notice of Motion and Motion to Avoid Judicial Lien on Real Estate [Your Name] [Your Address] [Your Address] [Your Phone #] [Last four digits of taxpayer ID #] Debtor is Self-Represented IN THE UNITED STATES BANKRUPTCY COURT [The district where your court is located] In the Matter of)Case No: [Enter your Case #] ) [Your Name])Chapter 7 ) Debtor) ) ) NOTICE OF MOTION AND MOTION TO AVOID JUDICIAL LIEN ON REAL ESTATE PLEASE TAKE NOTICE that Debtor [your name] is moving the Court to avoid a judicial lien held by [name of lien owner] on certain real property owned by the Debtor. This motion is being brought under procedures prescribed by Bankruptcy Local Rule [number of applicable local rule] of the United States Bankruptcy Court for the [Name of your court’s district]. If you wish to object to the motion, or request a hearing on the motion, your objection and/or request must be filed and served upon debtor within 20 days of the date this notice was mailed. You must accompany any request you make for a hearing, or any objection to the relief sought by Debtor, with any declarations or memoranda of law you wish to present in support of your position. If you do not make a timely objection to the requested relief, or a timely request for hearing, the Court may enter an order granting the relief by default and either 1) set a tentative hearing date or 2) require that Debtor provides you at least 10 days’ written notice of hearing (in the event an objection or request for hearing is timely made). 1.Debtor[your name] commencedthiscaseon[date of your bankruptcy filing]byfilingavoluntarypetitionforreliefunder Chapter7ofTitle11oftheUnitedStatesBankruptcyCode. 2.Thiscourthasjurisdictionoverthismotion,filed pursuantto11U.S.C.Sec.522(f),toavoidandcancela judiciallienheldby[nameoflienowner]onrealpropertyused asthedebtor’sresidence,under28U.S.C.Sec.1334. 3.On[date lien recorded against property],creditors recordedajudiciallienagainstthefollowingdebtor’s residenceat[address of property].Thesaidjudiciallienis enteredofrecordasfollows:[lien recording information as shown in the Recorder’s Office] 4.Thedebtor’sinterestinthepropertyreferredtoin theprecedingparagraphandencumberedbythelienhasbeen claimedasfullyexemptin[his/her]bankruptcycase. 5.Theexistenceof[lien owner’s]lienondebtor’sreal propertyimpairsanexemptiontowhichthedebtorwouldbe entitledunder11U.S.C.[Sec.522(b)/522(c)]. WHEREFORE,debtorpraysforanorderagainst[lien owner]avoidingandcancelingthejudiciallienintheabove- 1. Notice and Motion to Avoid Judicial Lien on Real Estate
2. Notice and Motion to Avoid Judicial Lien on Real Estate