Does bankruptcy eliminate liens?

In Hawaii, bankruptcy can eliminate certain liens on property. This is known as lien stripping. Under Chapter 13 bankruptcy, liens that are “unsecured” can be removed from property that is otherwise “secured.” This means that if the total amount of the liens is worth more than the value of the property, the liens can be removed. Usually, this process involves the court reducing the amount of the lien or even eliminating it. Under Chapter 7 bankruptcy, liens, including those against the debtor’s home, can also be eliminated. This may happen if the value of the debtor’s assets is lower than the amount of debt the debtor owes. In this case, the court may order that the lien be removed. But there are some liens which cannot be eliminated in bankruptcy. These are known as “non-dischargeable” liens, such as those for federal taxes, child support, alimony, or student loans. These liens will remain on the property despite the debtor filing for bankruptcy. In Hawaii, it is important for debtors to understand that bankruptcy can eliminate certain liens, but not all of them. It is important for debtors to consult a qualified bankruptcy attorney or accountant who is knowledgeable in Hawaii law. This will help them to determine if their lien can be eliminated and how to go about doing so.

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Does bankruptcy eliminate liens?

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