In most states, if you file a lawsuit and you get a judgment, that judgment becomes a lien against their real estate in the county. If you file bankruptcy and you exempt any part of your property, you want to strip off those judgment liens and you are allowed to do that in bankruptcy. It’s something called lien avoidance because the judgment lien impairs an exemption.

Sometimes your lawyer may forget or you may forget to tell your lawyer that you have that judgment and you may go through, get your discharge. Your bankruptcy case is closed. Years later you may want to sell or refinance your home and you discover that you have that judgment lien. You won’t be able to sell or refinance. Then what you have to do is go back into the bankruptcy court. You have to ask the court to reopen your bankruptcy case so that you can claim the exemption and avoid the lien. If it takes too long, the bankruptcy court may not let you do that because they say it’s unfair. Too much time has passed. You can’t recreate what the situation was at the time your bankruptcy case was closed. If that happens, then you have to negotiate with that creditor and it may not turn out the way you like it. That’s why it’s very important to do your lien avoidance motions right at the start in your bankruptcy case.