Consensual Liens

• Consensual liens, such as mortgages, are not removed from the property after bankruptcy in New Jersey, according to bankruptcy attorney Stephen R. Neuner. These types of liens must be paid off to be removed. The mortgage holder can no longer sue you to collect the money if your mortgage is discharged in bankruptcy, but you still must pay him what you owe before the lien can be removed.
  
  

Lien Avoidance Motion

• During bankruptcy, you or your attorney can file a motion for lien avoidance. If this motion is granted, it won't wipe out liens against your property for taxes or mortgage, but it does discharge any judgment liens against you -- liens against your property for unpaid judgments. The bankruptcy court evaluates your motion for lien avoidance based on your equity minus the amount of all mortgages and taxes that you owe. If your remaining equity is less than the current exemption amount in New Jersey, the court grants the lien avoidance motion.
  
  

Superior Court Motion

• As of July 2011, you can file a motion to discharge your judgment liens in the New Jersey superior court where the lien was placed one year after your bankruptcy case is closed. If you file such a motion, the court usually dismisses your liens as long as they qualify -- it cannot dismiss tax liens or liens for outstanding mortgage balances. If you did not file a motion to avoid liens at the time of bankruptcy, this method may be your best option, as it does not require you to reopen your bankruptcy case.
  
  

Tax Liens

• Tax liens must also be paid off to be removed from the property and cannot be discharged through bankruptcy. However, the New Jersey bankruptcy code allows debtors to avoid the portion of tax liens charged for penalties by filing a motion to avoid lien during the bankruptcy process. The lien on the principal amount due to the tax agency, whether it is the IRS or the New Jersey Department of Revenue, remains intact after the motion is granted.