It is possible to get rid of a judgment against your Texas homestead if you file bankruptcy.
If you get sued and have a judgment against you in Texas, one of the first things that the judgment-creditor usually does is to order an "abstract of judgment" from the court, and then record it in the county records of the counties in which you own land or houses.
This creates a judgment lien against any and all "non-exempt" property that you own in those counties - just like a mortgage. You cannot sell the properties without paying the judgment, at least if they are not your homestead property. And they can even have the properties sold to satisfy the judgment, so long as they are not your homestead.
But as to homestead property, Texas law does not permit a forced sale of a homestead to satisfy an ordinary dischargeable judgment debt, like one for credit card debt or a defaulted bank loan. In fact in bankuptcy a "motion to avoid judgment lien" can be filed, and a Bankruptcy Court order obtained "avoiding" or cancelling the judgment.
We routinely do this for our clients, and then we record the court order so the client won't have any problem selling or refinancing their home in the future.
A recent Houston bankruptcy court Memorandum Opinion by U.S. Bankruptcy Judge Letitia Z. Paul sums up the law very succinctly. The debtor owned a home, had a judgment, had to file bankruptcy, and then filed a motion to avoid judgment lien, which was granted. In re Brown, U.S. Bankruptcy Court, SD Texas, 2014.
So if you file bankruptcy and have a judgment against you that has been recorded in county records, and you own a homestead in that county, be sure that your lawyer files a motion to avoid judgment lien during your bankruptcy case. There are other ways to get the judgment lien released, but the motion to avoid judgment lien is the simplest and quickest way, in my experience.
Do you think this is right, that people can cancel judgments on their homes after a bankruptcy? Or do you think that they should still have to pay the judgments? Give us your comments or questions below!