A judgment is a court order indicating that you owe a balance to your creditors. In the event that you cannot pay your debt on time, your creditors can use judgments to try to collect your personal property or garnish your wages to satisfy the debt.
For creditors to obtain a judgment, they will file a lawsuit against you seeking payment on your debts. If you don’t respond, your creditors win by default and will have the go signal to do things such as collect your property, garnish your wages, seize your bank accounts, or place a lien against all your assets.
Once a judgment has been passed by the court, this gives your creditor more power to use your property to settle your debts. To make matters worse, a judgment is in the public record so it will appear on your credit report, which can be damaging to your overall financial health.
And since they last for a period of 10 years, it gives your creditors a powerful to collect anything that they can so that your debts with them are settled.
Since a judgment can cause so much damage to your credit standing, a lot of people wonder whether there’s a way to quickly clear it up.
Many experts will recommend filing for bankruptcy , but does bankruptcy completely clear judgments?
Filing for bankruptcy will discharge you from any personal liabilities including debts that you owe to creditors. However, it’s important to note that once a judgment been filed and a lien is placed on your property, bankruptcy will not be able to remove that lien.
You can ask your bankruptcy lawyer to petition the court to have some liens on your property voided. But it is best to deal with judgments before they are attached to the property.
Nondischargeable debts include student loans, child support, spousal obligations, debts owed to the government (fines, court costs, taxes, restitution in criminal cases) and more.
As a general rule, it is better to file a bankruptcy case before a judgment is entered. In most cases, if a judgment has been entered or a lawsuit has been filed, it does not change whether you can discharge the debt in the bankruptcy.
Creditors can ask the bankruptcy court to make a dischargeable debt become nondischargeable by filing an adversary proceeding. The types of dischargeable debts that can trigger an adversary proceeding are:
If the judgment does not fall into these categories, the creditor will not likely object to your discharge.
Getting a bankruptcy discharge can bring relief, especially if the lien from your creditor can be attached to important assets, like your house. But there is a way for you to get rid of your judgment and this is called lien avoidance.
As long as you did not give the creditors consent for the judgment, you can remove the lien on your properties and assets with a chapter 7 bankruptcy . There are some requirements for this direction, which you should discuss in more detail with your bankruptcy lawyer.
Please note that it is critical to follow bankruptcy procedures to avoid the lien. You also need to act quickly so that you can claim your property as an exemption in the bankruptcy paperwork and file for a motion with the court. However, take note that if you have more equity than what is available for exemption, your creditor might argue with the court that the lien is valid only up to a certain amount and a lien can be put in place for the equity that is not part of the exemption.
Most judgments can be discharged by bankruptcy, except for those that are based on fraud. If you think you qualify for bankruptcy, make sure that you consult with a bankruptcy attorney right away to help you file a petition to place an automatic stay on any judgment and actions enforced by your creditors.
There are, however, several ways to get rid of a judgment apart from filing for bankruptcy. One of the most common methods of getting rid of a judgment is to vacate it.
To vacate a judgment, you need to file a motion to ask the judge to vacate the judgment. You also need to tell the judge why you did not respond to any lawsuits raised against you. If you do not receive any notice of the lawsuit, you have 2 years from the date of the judgment to make any motion.
If there is a lawsuit, you have 6 months to respond. If your motion is successful, the judgment is then vacated, and you can contest your case. This gives you more options to resolve or settle the case.
Another strategy that you can do is to satisfy the judgment. This means that you need to settle your judgment and have the creditor file a “satisfaction of judgment” with the court. Creditors often settle judgments for less than the balance owed by the debtor. Make sure that you obtain a clear written agreement with the creditor.
You need help from an experienced bankruptcy attorney to help you go through the process of getting rid of a judgment through bankruptcy. That way, you will be able to protect your assets and prevent your creditors from putting up lines on your property.
If you’re in the Dallas or Fort Worth areas, get in touch with Leinart Law Firm to get started with our experienced team.
Free Bankruptcy Evaluation
Discuss your situation and your options with an experienced bankruptcy lawyer.
Your privacy is important to us. We'll never share your information.