In 2005, I started a real estate investing business, and I bought and financed quite a few properties and kept them as rentals. Then the crash in 2008 happened, and I ended up filing bankruptcy in 2012. I did re-affirm my house and my car, but I filed on the rentals and credit cards.
I did keep several of the rentals that make money (I continued making payments) - and they are still in good standing. However, I recently learned that one of the banks filed a judgment against my LLC (which didn't file bankruptcy), and of course the houses are in the LLC name.
I learned this because I did a major repair to one of the houses, and found that I cannot refinance or sell the house because this bank (that does not hold the mortgage for this particular property) now has this judgment against my business name.
A judgment that has been entered and indexed in a county’s judgment docket creates a lien on each an every parcel of real property owned by the judgment debtor in that county. Thus, if all three parcels owned by your LLC are in the county in which the judgment creditor’s judgment has been entered and indexed, the judgment creditor holds a lien on all three parcels. If the LLC acquires another parcel of real property in the same count, then the judgment lien immediately attaches to that parcel.
Judgment liens appear remain on the record for 10 years in Indiana. Many states allow judgment lien holders to renew judgment liens for additional periods. Some allow this to be done only once, others have no limit.
A judgment lien holder does not foreclose. Instead, the lien holder must seek a writ of execution and request that the sheriff of the county sell the property at a sheriff’s sale.
If the judgment lien holder has not executed on its judgment and judgments expire in Indiana after 10 years, your only option is to hold on to the property and hope that the judgment lien holder does not act on its judgment. I have seen that happen in our state many times.
Answers and comments provided are for general discussion only. My comments are not to be considered legal advice and they do not create an attorney-client relationship.
I really have a lot of contempt for those who recommend creating LLCs for this purpose. Many negtive repercussions. Creditors may be willing to settle judgments for a reduced lump sum amount. Get to an experienced debt settlement attorney and discuss what kind of offers you can afford to make. Hope this perspective helps.
the judgments are liens on any LLC real estate in the county for 10 years and can be renewed for another ten years. the bank can foreclose on these or just wait till you want to sell or re-finance!
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