File Bankruptcy against a Judgment
Many individuals facing debt lawsuits from creditors wonder whether they can file for bankruptcy against a judgment. The short answer is yes, but the relationship between bankruptcy protection and debt judgments is a little more complex than that.
Here's an overview of what it means to file bankruptcy against a judgment.
When Can I File for Bankruptcy against a Judgment?
First of all, it's important to establish what exactly a judgment is. Consider this illustration:
- A debtor owes money to a creditor but cannot or does not repay it.
- The creditor can bring a lawsuit against the debtor for the amount of the debt.
- The debtor may (but does not have to) answer the lawsuit, either with a defense explaining why she does not owe the debt or an objection to the debt's amount.
- The judge makes a decision in the case. If the debtor did not answer the suit, the judge automatically rules in favor of the creditor.
- A judge's ruling that requires the debtor to pay the creditor is considered a "judgment."
Can Bankruptcy Eliminate a Judgment?
There are a number of ways people can eliminate a judgment against them. These include:
- Repaying the creditor. This is the most straightforward method but may not be possible, depending on a person's financial circumstances.
- Negotiating with the creditor. A debtor may begin negotiating even before the judge makes a decision in a case. Some creditors are willing to negotiate on debt judgments because taking a debt to court costs the creditor a certain amount of money in legal fees. To avoid these fees, creditors may settle for a lesser payment from debtors.
- Filing for bankruptcy. In bankruptcy, a judgment may be discharged as easily as the original debt that triggered the judgment.
In some situations, though, discharging a judgment in bankruptcy may be more complicated. If, for example, the judgment involves a charge of fraud, includes a lien against the debtor's property, or is for debts of an uncertain amount, it could prove non-dischargeable in bankruptcy.
Can I File Bankruptcy against a Judgment?
If you're interested in learning whether a judgment against you might be dischargeable in bankruptcy, you can take advantage of a free legal consultation by filling out this form.