Impact Of A Bankruptcy On A Default Judgment
If youve got a default judgment against you for an unpaid credit card debt, personal loan, medical bill, or similar debt then you may be thinking that filing for bankruptcy will solve the problem. New York consumers may want to seriously consider the full story first.
A default judgment is a common reason for New York residents to consider filing for bankruptcy. In New York a judgment creditor has the right to freeze your bank account, take part of your wages, and continue to add interest on the amount due at a statutory rate until the debt is paid in full.
If youre living paycheck-to-paycheck as is, the prospect of having to surrender a portion of your income isnt appealing. And given the high cost of living in New York, every dollar counts.
Its true that filing for bankruptcy will stop the income execution , lift the hold on your bank accounts, and give you some breathing room. But even the bankruptcy discharge wont eliminate the impact of that default judgment against you.
A judgment is a matter of public record, and creates a statutory lien on any real estate you own as of the date on which the judgment is filed. Your bankruptcy may eliminate your personal liability for payment, but if you own any real estate then that judgment will still need to be paid in full when you sell the property.
Bankruptcy Process And Outcomes
There are several steps you must take when you have decided to make yourself bankrupt. While instructing a solicitor is notnecessary, the ISI considers it advisable to get professional legal advice inadvance of declaring yourself bankrupt or defending any bankruptcy proceedings.The Irish Mortgage HoldersOrganisation provides a free service in relation to bankruptcy.
The process is summarised below:
- Lodge 200 with the Official Assignee
- Complete your petition, which must be verified by a sworn affidavit and a sworn statement of affairs
- File the relevant bankruptcy application documents in the Examiners Office
- Attend the court hearing on the date given, where the judge, if satisfied, will adjudicate you bankrupt
- Meet the Official Assignee or Bankruptcy Inspector to be interviewed about all your assets and debts
- Place a notice of your adjudication as a bankrupt in Iris Oifigiúil
- Place a notice of your adjudication as a bankrupt either on the ISIs website or in a national daily newspaper
Before 2016 a statutory High Court sitting was also required, but thisrequirement was removed by the Bankruptcy Act 2015.
Whos Filed For Bankruptcy
Almost eight per cent of non-retired Canadians between the ages of 45 and 64 or more than 480,000 people have gone through at least one bankruptcy in their lives. Statistics Canada
In the end, if youre told that the best solution to your financial woes is a bankruptcy filing, dont despair. Bankruptcy laws were set up to allow people in dire straits to wipe their slates clean and start fresh.
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Talk To A Bankruptcy Lawyer About The Best Option
As you can see, bankruptcy can get very complicated, especially when issues like property liens are involved. Thats why its best to speak with a local bankruptcy attorney about your options and the steps you should take to best protect your property.
Bankruptcy is not the only debt relief option available to you. The attorney you meet with can explain other courses of action as well.
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How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities a schedule of current income and expenditures a statement of financial affairs and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling evidence of payment from employers, if any, received 60 days before filing a statement of monthly net income and any anticipated increase in income or expenses after filing and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
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Does Bankruptcy Clear Lawsuit Debt
Generally speaking, yes. As long as the underlying debt is dischargeable, the lawsuit debt is dischargeable also. If the debt you got sued over was not dischargeable before, itâll still be nondischargeable once itâs reduced to a judgment.
Exceptions for Fraud
If the lawsuit was based on a claim of fraud or other bad acts, the lawsuit debt may not be dischargeable in bankruptcy. If youâre subject to a fraud complaint, your best bet is to get a knowledgeable bankruptcy lawyer to advise you on your best course of action.
What Happens If The Judge Orders A Warrant Of Committal For Contempt
If the judge orders the debtor or other person tobe jailed for contempt of court, the clerk will issue a Warrantof Committal directed to the police. The warrant authorizes thepolice to take the individual named in the warrant to the nearest correctionalinstitution and hold him or her there for the time specified in the warrant.
If you are found in contemptof court at the contempt hearing and a warrant of committal is issued, you oryour representative may ask the court to set aside the warrant and the findingof contempt by filing a Notice of Motion and Supporting Affidavit at the Small Claims Court. In your supporting affidavit and at the motion hearing, explain to thejudge the reasons why the contempt order should be set aside.
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A Judgment Lien Can Survive Your Bankruptcy Case
While you may be able to eliminate the dischargeable debt the judgment against you is based on, there are other things to watch out for. Your creditor may obtain a lien on your property that gives them the right to it. Thus, the creditor can exercise the right to be paid from the proceeds when you sell the property.
The worst part is that a judgment lien can survive your bankruptcy case and make it difficult to sell or refinance your property in the long run. However, with a knowledgeable Charlotte bankruptcy attorney by your side, you can file a motion to remove the lien.
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How Does A Creditor Begin The Garnishment Process
The procedure is:
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If You Are Considering Bankruptcy
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 youre in the Dallas or Fort Worth areas, get in touch with Leinart Law Firm to get started with our experienced team.
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What Is A Judgment
A judgment is a court order that says you are legally responsible for paying the plaintiff, the company or person that sued you. Money judgments are entered in a wide variety of types of cases. Some examples include personal injury, medical malpractice, and breach of contract claims. Debt collection lawsuits are a type of breach of contract suit. The creditor goes to court claiming that you agreed to make payment in exchange for a service or a loan or goods you received, and you failed to do so.
Judgments in debt collection cases are entered in a few different ways. Some judgments are entered by consent, meaning that the debtor and creditor came to some sort of agreement. Usually, this involves the creditor reducing the balance due or agreeing to smaller payments over time. In other words, the creditor usually offers something that benefits the debtor. Other judgments are entered by the court after a hearing or trial. Still others are entered by default.
A default judgment is entered when the person being sued fails to file a response, or to appear in court. The exact process required to avoid a default judgment is a matter of state law. Surprisingly, most judgments in debt collection cases are default judgments. In other words, the judgment is entered because the person being sued didnât try to defend themselves. A judgment appears in the public records section of our credit report.
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Are You Eligible To File Bankruptcy
Some judgments are not dischargeable in bankruptcy, meaning your judgment will not be erased if you file bankruptcy. Non-dischargeable debts might include:
- Child support
- Government-owed debts
If you file bankruptcy and owe on a non-dischargeable judgment, you will still be liable for this debt after the bankruptcy case closes. The only exception is if they are paid in full through a Chapter 13 plan.
What Can The Owner Do If The Item Cannot Be Located
If the personal property referred to in a writ ofdelivery cannot be found or taken by an enforcement officer, you can ask thecourt, by filing a notice of motion, for an order directing an enforcementofficer to seize any other personal property owned by the debtor.
If you obtain this type of order, enforcementstaff will keep the personal property until the judge makes an order for itsdisposition . You must pay any additionalcosts to execute the order or store the personal property during this time.
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Filing A Chapter 13 Bankruptcy May Help
So what happens if you are financially responsible for the debts caused by a DUI or your willful or malicious injury to another person or their property and you do not have the funds readily available on hand to repay the debt? Although the debts are not dischargeable in a Chapter 7 bankruptcy you can file a Chapter 13 Bankruptcy to repay the debts over a period or three to five years. If the debts cannot be repaid within the five years due to your financial circumstances you may always file another Chapter 13 bankruptcy to pay the remaining balance.
If you owe any debt related to an accident it is best to seek the advice of an experienced bankruptcy attorney that will help you either discharge the debts in a Chapter 7 or repay the debts in a Chapter 13 and ultimately help you move on with your life.
At Bond & Botes, our affiliated offices offer free initial consultations. Please feel free to call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys. We will analyze your situation and help you to make the best decision possible to help you eliminate that debt once and for all.
Our Experienced Bankruptcy Attorneys Are Available To Answer Your Questions Regarding Judgments
Just because a creditor sued you in court and won does not mean you are out of options. Bankruptcy provides people overwhelmed by debt a means to achieve a fresh start. Our Pennsylvania bankruptcy attorneys are available to review your circumstances and offer you options. Call Young, Marr & Associates in Pennsylvania at 701-6519 or New Jersey at 755-311 to schedule a free appointment.
Bankruptcy Resource Center
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What Happens At A Contempt Hearing
A contempthearing is a serious matter. At the contempt hearing, you will be given anopportunity to explain your actions and any reasons for them. The judge mayorder you to attend an examination hearing. The judge may also make an orderthat you are to be jailed up to five days for contempt of court. If you do notattend the contempt hearing, orders may also be made against you.
What Types Of Civil Lawsuits Will Bankruptcy Stop
Except for family court matters involving domestic support obligations, just about all civil litigation will come to a halt at least temporarily. An order called the automatic stay prohibits creditors from pursuing you during your bankruptcy case .
Who tells the court about the bankruptcy filing? The plaintiff will have the responsibility of informing the court that the stay is in place. From a practical standpoint, it makes sense for you to let the court know about your bankruptcy case, too. If youre represented, your bankruptcy lawyer will likely provide notice to both the plaintiff and the tribunal.
What will happen next? Nothing. Bankruptcy will stop most common collection lawsuits permanently, and the amount sought after by the plaintiff will get wiped out in your bankruptcy.
Youll be off the hook for most other cases, too, unless the creditor does one of the following things:
- convinces the court to lift the automatic stay so that the trial can continue to move forward , or
- files and wins an adversary proceeding alleging the same matter in bankruptcy court.
What are the chances that the creditor will pursue the case? Many times, the creditor wont bother with the caseespecially if the debt wont survive bankruptcy .
Also, pursuing litigation is expensive, and if youre bankrupt, theres probably no money to be had. A rational creditor wont throw good money after bad.
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Can A Judgment Be Discharged In Bankruptcy
Individuals or businesses that are finding it difficult to pay their creditors may want to consider filing for Chapter 7 or Chapter 13 bankruptcy in the U.S. Bankruptcy Court, in one of Texas four judicial districts. These programs involve the institution of a case in federal court for the purpose of reducing or eliminating individual debt. A third type of bankruptcy, Chapter 11, is available to businesses.
Learn more about Houston bankruptcy attorney, Seth Kretzer, who is ready to answer your questions about bankruptcy today.
Chapter 7 and Chapter 13 bankruptcy are distinct from one another, and each is available to an individual depending upon the severity of his or her personal debt. Chapter 7 bankruptcy is known as liquidation bankruptcy, and involves most of the filers property being sold to pay off debts. It is generally used by people who have limited income or no income and lack the ability to pay back any portion of their debts for the foreseeable future.
Chapter 13 bankruptcy, on the other hand, is known as reorganization bankruptcy. Filers of Chapter 13 bankruptcy work with the court to develop and follow a court-ordered repayment plan. Chapter 13 filers usually keep their personal and real property while paying back a portion of their debts.
Following the proceedings of Chapter 7 or Chapter 13 bankruptcy, the Bankruptcy Court will discharge unpayable debts.