.:Remove "Avoid" Liens on Your Home:.

A discharge in bankruptcy voids most underlying judgment against you, but the discharge does not automatically remove a judgment lien filed against your home. However, if you qualify, your attorney will be able to file a motion to avoid or cancel the lien. This is a separate bankruptcy proceeding that must be filed while your main bankruptcy case is open.

A bankruptcy court can remove most types of judgment liens if such liens "impair an exemption" that you would be entitled to under Vermont Law. Although bankruptcy is a federal law, it is largely state law that determines how much property you can keep when you file bankruptcy. Under Vermont law, you can protect up to $125,000.00 of equity in your home from creditors.

Equity means the difference between the value of your home and the amount you owe on it. For example, if your home is worth $200,000.00 and you owe $125,000.00 on it, then you have $75,000.00 of equity in it.

A Vermont creditor who obtains a court judgment against you can create a lien against your home by recording a certified copy of the judgment in the town clerk's office. However, if your equity in the home is less than the $125,000.00 (or possibly up to $139,800.00), then you can obtain an order from the bankruptcy court removing the lien.