Mechanic’s Liens in Bankruptcy
Do you want to know how to strip a Kentucky Mechanic lien in Bankruptcy? Mechanics liens are no different from any other lien in Bankruptcy. Often such liens can be stripped just like any other judicial lien when you file a bankruptcy. You only need to prove that it impairs the debtor’s exemption. A mechanics lien is a special legal tool which is meant to insure the workman who worked on a home is paid. However if is not properly filed or otherwise used it is easily stripped or unenforceable.
Filing bankruptcy may free you of being personally liable for the debt. But a mechanic’s lien is just like a mortgage. It will survive the bankruptcy if you do not destroy the lien by stripping it during the bankruptcy.
If you fail to use an experienced law firm you may not get this done during your case. You may get the discharge but when you sit down to sell the home the mechanic lien may have to be repaid. It may hold up the sale of a home or a purchase of the home. It takes about a month to reopen a bankruptcy case and strip a lien which could force you to pay the lien. For over thirty years we have been stripping these liens.
How defeat a Mechanic lien without filing bankruptcy
In order for a workman to file a judicial lien in Kentucky he has to give written notice to a homeowner. Specifically he has to notify the homeowner in writing within seventy-five days if the claim is less than one thousand dollars. If the amount is over one thousand dollars notice must be within one hundred twenty days. This workmans lien includes not only the labor but also the materials used in repair or construction. The lien created under KRS 376.010 can be superior to a mortgage filed after the workmans lien. Without going through very specific steps the mechanics lien is invalid.
The mechanics lien needs to file a preliminary statement of the lien. The mechanics lien has to be file timely and cannot be filed late. Both the filing which is sent to the homeowner and the filing sent to the court clerk has to be perfect and timely. The lien statement needs to be accurate and clear. There are limits to what the workman may claim for the rental of tools and materials as well as labor. There are other requirements for the preliminary notices given to the owner. Special final notice must be given to the court clerk if the lien is to be superior to a mortgage or other lien holder.
How to strip a Mechanic or Judicial lien in Bankruptcy
In bankruptcy the debtor has a right to a fresh start and start life over with about 25,000 in equity of his or her home. The federal exemption can be stacked for each person on the deed. The equity in the home results from deducting your mortgage and exemptions from the value of the property. If there is money left over there is equity for the judicial lien to attach. If not then the judicial or workmans lien can be stripped off and removed.
This is often done by filing a standard motion and order with the court. But in order for the judge to determine there is no equity so a lien can be stripped a recent appraisal may be needed. Often other proof such as a recent mortgage statement or an estimate of needed repairs may be needed. Stripping a judicial lien is specifically allowed in Bankruptcy but stripping a mechanics lien is more difficult. It isn’t specifically provided for by statute. It is instead implied. Also a mechanics lien is a statutory lien which is different from stripping a consensual lien under bankruptcy law.
If you need to strip a mechanic lien in your bankruptcy be sure to contact our office. It isn’t easy and needs to be done by an experienced and qualified bankruptcy attorney.