If you've had something built or had any building or house renovated or repaired, you know that for any construction, there are usually a lot of people involved: contractors and subcontractors, plumbers and electricians, brickers and drywallers, etc. Naturally, all of those people want to get paid — just one of the factors that make home building and home repair such a financially draining experience. Ohio and Kentucky state law give people who work on homes, buildings and other constructions some special legal tools to help them collect for the work they've done, called a "mechanic's lien."
You might be having some trouble with debt, and creditors are after you, including people who have done construction, repair or renovation work. Filing bankruptcy is one way to free yourself from much of that debt, but if you have mechanic's liens, your situation may be trickier. Unlike most debt, mechanic's liens can hold on past a bankruptcy. That doesn't mean that bankruptcy isn't a good solution for you, it just means your situation might call for a more experienced hand to guide you through the process.
Mechanic's Liens During Bankruptcy
The Steiden Law Offices is not afraid to take on a difficult case, even one with mechanic's liens. Our South Ohio and North Kentucky attorneys have the experience to take on tricky cases. We will look at your case and diligently identify your options to help you find the freshest start available. With 25 years of experience, we've handled more than 6,000 bankruptcy cases. Let us take on your situation and represent you through this tough time. Call (855) 741-3328 or send an online message to set up a risk-free consultation.
We are proud to represent clients in Southern Ohio and Northern Kentucky. We have two offices in Cincinnati, where we can represent clients throughout Hamilton County. We also have offices in Florence and Covington, where we can represent clients in Kenton County and Boone County.
How a Mechanic's Lien Happens
Often, mechanics, contractors, and other construction-related workers will do work on a site, or vendors will provide materials, and they won't get paid until the job is done and is satisfactory. In order to make sure they get paid, Ohio and Kentucky have provided them with the ability to file a mechanic's. The mechanic's lien is the amount they are owed, and attaches, or becomes legally connected to, the property on which the filer worked, and onto any buildings that are constructed on that property. Subcontractors and materialmen who you didn't necessarily hire are also able to file mechanic's liens, and even if you did not pay them directly, they are able to seek payment from you.
The lien then becomes an encumbrance on the property, meaning that if the property is sold, the amount of the lien must be satisfied from the sale funds. The lien also stays on the property even if the property changes hands. Having a lien on a property can make it unattractive to potential buyers because it means the seller doesn't quite have a clean title, and they don't want the encumbered property.
Anyone seeking a mechanic's lien must follow a certain procedure. The person filing must give notice to the person they are filing a lien against. The procedure differs depending on what state the person filing the lien was working in and the person's role in the construction. There might be a type of notice that the person filing is supposed to provide at the beginning of the process. For example, in Ohio, all subcontractors and materialmen are supposed to post a notice of furnishings that they are working on the project when they start work on any non-commercial project.
The most important thing for a mechanic's lien to stick is for it to perfect. Perfecting means that the lien takes a security interest, meaning it has priority over other debts and liens. For a mechanic's lien to perfect, an affidavit with information about the lien must be filed with the appropriate government agency. In Kentucky, it must be filed with the county clerk in the county where the construction took place, and in Ohio, with the county recorder. The filer must then serve notice to the person she or he is filing against in a certain amount of time: within 30 days in Ohio and within six months in Kentucky. In a process with this many steps, the filer frequently makes mistakes, making the lien void — something a good bankruptcy attorney is bound to find out.
Effect of a Mechanic's Lien on Bankruptcy
When you file for bankruptcy, particularly under Chapter 7, many of your debts will be discharged. If there are liens on your property, many might be avoiding, basically meaning it will go away — especially liens on your home and other property with exemptions under the bankruptcy code, and especially judicial liens, which are liens that are granted when there is a judgment against you in court.
This isn't necessarily true with mechanic's liens. Mechanic's liens are created specifically by state law and are called statutory liens. While the Bankruptcy Code specifically states that judicial liens can be avoiding, statutory liens are not the same. If you have mechanic's liens, they might remain through bankruptcy, encumbering your largest assets and making your situation much trickier.
But don't let the fact that you have mechanic's liens keep you from seeking relief through bankruptcy. Instead, let an experienced Covington bankruptcy lawyer help. When a person files a mechanic's lien, he or she must go through very specific steps within certain periods of time under law for the lien to perfect and be valid. An attorney will review those actions to make sure that the contractor claiming the lien actually even has one. And even if a lien cannot be avoided, a bankruptcy lawyer can help you determine what effect it might have on your other options.
Steiden Law Offices | Florence Bankruptcy Attorneys
If you're filing for bankruptcy, you're looking to be free from the weight of debt. Mechanic's liens can weigh you down. Let the experienced bankruptcy lawyers for Cincinnati and Northern Kentucky at Steiden Law Offices help you. Call (855) 741-3328 or send an online message to set up a risk-free consultation.