In Missouri, when a creditor obtains a judgment in anything other than small claims court, that creditor has a lien against any property which the defendant owned at the time the judgment was entered. In most instances a lien may be removed, that is, avoided in a Chapter 7 bankruptcy or Chapter 13 bankruptcy case. The debt after lien avoidance becomes an unsecured debt, which in most instances will be discharged without repayment.
In order to completely avoid the judgment lien in bankruptcy, the bankruptcy client must not have more than $15,000.00 in equity in the real property.
If there is more than $15,000.00 in equity in the real property, some of the judgment lien may be avoided with the avoided portion turned into unsecured debt. In a Chapter 7 bankruptcy or Chapter 13 bankruptcy case in which the client owns a house worth $100,000.00 with an $80,000.00 balance on a mortgage on the property, where creditor Bank XYZ has a $10,000.00 judgment lien against the property, $5,000.00 of the lien of Bank XYZ is avoidable with that portion of the debt owed to Bank XYZ being turned into unsecured debt with the filing of a motion to avoid the lien.
There is no filing fee for the filing of a motion to avoid a judgment lien.