Don't worry if you've received a judgment - you can still file for bankruptcy. However, waiting until after you've received a judgment can lead to consequences. If you're struggling with debt, it's best to seek advice from a qualified bankruptcy lawyer sooner rather than later.
By waiting too long to explore your options, you might lose some of the choices you had earlier in the process. In some cases, you might not even need to file for bankruptcy if you look into ways to handle your debt problems before a creditor takes legal action.
What is a Personal Judgment for Outstanding Debts?
If you owe a debt to someone, a personal judgment from a court may be issued, stating that you owe them money. This can be due to a collection account, like a credit card or personal loan, or for a deficiency in a foreclosure or repossession. The deficiency is the amount of money owed to the lender after the collateral is sold and applied to the outstanding debt.
Furthermore, courts may also issue monetary judgments for personal injury claims, such as DUI accidents, slips & falls, and other accidents. A monetary judgment can also be issued in a civil matter, such as a contract dispute.
Can you file bankruptcy on court judgments?
Are you struggling with debt and considering filing for bankruptcy? You may be wondering if it's possible to file bankruptcy on a court judgment and be released from liability for the debt. The answer is yes, in many cases. Let's take a closer look at the different scenarios.
It's important to note that while your judgment may be discharged, you may not qualify for Chapter 7 bankruptcy. To determine your eligibility, you can use the official US bankruptcy forms and a free bankruptcy calculator. Simply enter your information in the calculator to estimate the cost and qualification for Chapter 7 bankruptcy.
Collection of Judgments by Creditors
When someone sues you, it can lead to a judgment against you if you don't respond. This is known as a default judgment. Even if you fight the lawsuit, you can still end up with a judgment against you if you lose. Once a judgment is issued, the party that won can take legal action to collect the debt.
Depending on the state you're in, the creditor may be able to seize your property or garnish your wages to satisfy the judgment. However, there is a way out. Filing for bankruptcy can eliminate the judgment and help you get back on your feet.
Filing Bankruptcy Before and After a Judgment
If you're facing a potential judgment, filing for bankruptcy before the judgment is issued can be the best way to deal with it. This is because the automatic stay that comes with a bankruptcy filing stops the lawsuit immediately. However, if a judgment is already filed, it becomes a lien on your property in most states, and even if the debt is discharged through bankruptcy, the lien remains.
To get rid of the judgment lien, you'll need to hire a bankruptcy attorney to petition the court to cancel it. However, this service usually comes at an extra cost, and there's a chance the court could deny your request. That's why it's generally better to file for bankruptcy as soon as possible, rather than waiting for a judgment to be entered.
Another reason to file for bankruptcy sooner rather than later is that some creditors move quickly to collect on a judgment. Waiting too long could result in the loss of assets or income. Filing for bankruptcy could also help you recover some of the money that was seized through wage garnishment. However, the amount you can recover will depend on the timing of the bankruptcy filing and the garnishment or seizure of assets.
Judgments That Are Not Dischargeable
When filing for bankruptcy, it's important to note that not all judgments are dischargeable. If the debt underlying the judgment wouldn't be discharged in bankruptcy, then the judgment won't be either. For example, judgments for DUI accident claims cannot be discharged through bankruptcy.
Other types of non-dischargeable debts include domestic support obligations, student loans, restitution, fraud, and most debts owed to the government. If you have any of these types of debts, you'll still be responsible for paying them after your bankruptcy case is closed, unless they're paid in full through a Chapter 13 repayment plan.
If a creditor wants to continue a lawsuit against you despite your bankruptcy filing, they can ask the court to lift the automatic stay. This is more likely to be granted if the debt is not dischargeable in bankruptcy, or if the outcome of the case affects the creditor's rights in the bankruptcy case.
Finally, creditors can also file an adversary proceeding, which is a lawsuit filed within a bankruptcy case. These proceedings typically deal with debts that a creditor alleges are non-dischargeable or when the debtor commits fraud or other misconduct. In an adversary proceeding, the same bankruptcy judge assigned to the case will hear the case.
Should You File Bankruptcy?
Dealing with bankruptcy can be a challenging situation, and the best way to handle it depends on your unique circumstances. However, one effective approach is to seek the guidance of a bankruptcy lawyer as soon as possible.
A bankruptcy attorney can help you understand your options and determine whether filing for bankruptcy is the right choice for you. They can also provide you with an estimate of the cost and qualification requirements for bankruptcy.
We partner with bankruptcy lawyers across the United States who offer free consultations to help you make an informed decision. You can use our bankruptcy cost and qualification calculator to get started.
It's important to take action quickly when dealing with bankruptcy to maximize your options. Ignoring the issue can lead to further financial losses or even the loss of property.
If you have any questions or want to speak with someone about your debt problems, please don't hesitate to contact us!