Mechanics Liens and Chapter 7 Bankruptcy
California calls it a mechanics lien.
Also known as a construction lien or materialman’s lien, this legal claim can be filed against a property by an unpaid contractor, subcontractor, laborer, or material supplier. The purpose of this type of lien is to protect workers from not getting paid for work they’ve already done, and to keep suppliers from not getting compensated for materials used on a project.
Unlike some types of liens, under certain circumstances, mechanics liens can be discharged in a Chapter 7 bankruptcy.
If you have a mechanics lien against your property and are considering filing Chapter 7, you need to contact an attorney who’s experienced in this particular area of law. The way a lien affects a bankruptcy filing is very complex, and not all lawyers have the background required to handle such cases. The skilled bankruptcy attorneys at Encino’s Nader Law Firm have more than 20 years of experience helping Southern California clients solve their debt issues. Call (800) 568-0707 today for a free consultation.
Why a Mechanics Lien?
Many people are shocked to find out that they have a mechanics lien against their property, even though they paid for the work they had done!
Example: You hire a general contractor to remodel your kitchen. He does so, using marble countertops he got from a local supplier. You pay the general contractor and enjoy your new kitchen. But, unbeknownst to you, the general contractor never paid the supplier for the marble countertops. In such a case, the marble supplier can hold a mechanics lien against your house.
When Is a Mechanics Lien Dischargeable?
Mechanics liens are dischargeable under Chapter 7 bankruptcy only if the lien has not been “perfected” (properly recorded). In such cases, a mechanics lien is considered unsecured debt, and therefore, dischargeable. If the lien has been perfected, it is considered secured debt and not dischargeable through a simple Chapter 7 Bankruptcy. A possible solution to your problem would be filing for Chapter 13 bankruptcy. This would allow you to restructure your debt and enable you to pay it off over a three- to five-year period.
Get Help for a Mechanics Lien
A mechanics lien against your property can cause you a variety of problems, including preventing you from getting a loan or selling the property.
If you have a mechanics lien on your property, or if you are planning on having repairs or remodeling on your property, do the smart thing and consult an experienced attorney. Located in the San Fernando Valley, the Nader Law Firm has been helping area residents with their debt issues for more than two decades. Call our concerned legal team today for a free consultation by dialing (800) 568-0707.