Important: A discharge of debtor in bankruptcy does not release a judgment lien against the debtor’s property. The discharge only acts to stop the collection of the debt against the debtor personally. The discharge does not extinguish the judgment lien and therefore, continues to attach to real property. The simplest way to remember this is:
“A lien going into bankruptcy is a lien coming out of bankruptcy.”
A release of the judgment lien must be obtained and recorded, or an order of the bankruptcy court to sell free and clear of the lien must be obtained and reviewed by underwriting counsel.
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