Can Creditors Collect a Judgment Lien during Bankruptcy?

When an individual files for bankruptcy protection, he or she may have judgments against them. Some of these court judgments awarding certain sums to judgment creditors may have been secured if the judgment creditor took the steps necessary to file judgment liens in the counties where the bankruptcy debtor owns property. Once the debtor files the bankruptcy case, can the judgment creditor still enforce the judgment lien? Can that creditor collect the amount due under the judgment?

The answer is not always clear upon first blush. Whether and to what extent it is collectable will depend on the nature and magnitude of the bankruptcy debtor’s debts. If the value of the property owned by the bankruptcy debtor is great enough that the sale of such property could cover the sum of all secured liens against that property, then the judgment creditor will have a better chance it obtaining a favorable recovery of the judgment.  But this may not be possible if the bankruptcy debtor utilizes his or her homestead exemption permitted under New Mexico law. If the exemption is invoked, the remainder of the value of the property may not be sufficient to satisfy the judgment lien particularly where a bankruptcy debtor owns property encumbered by multiple liens.

It is important to note, in this regard, that the decision concerning what type of bankruptcy should be filed by an individual may depend, in some part, on whether that individual owns real estate that is so encumbered.  A paramount reason individuals choose to file Chapter 13 bankruptcies is that they intend to keep their residence.  A debtor with judgment liens against their home may want to opt for Chapter 7 bankruptcy instead. Chapter 7 bankruptcies possess the attributes of a liquidation process. Before determining what type of bankruptcy case fits a particular debtor’s needs, the debtor should consult with New Mexico bankruptcy attorneys about their financial condition including the existence of liens against their property.

At the Law Office of George “Dave” Giddens, P.C. our attorneys serve Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. And we have bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Our conveniently located office has ample free parking and is easily accessible by public transportation. We offer flexible office hours upon request. To make an appointment for a consultation about your real estate matter, contact us online by visiting the firm’s website at or call us at (505) 633-6298. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.