What To Do If A Creditor Obtains A Judgment Against You
This can be a difficult and complicated process to tackle on your own. An experienced bankruptcy lawyer can help you navigate this process.
Your wages and assets are at risk when a civil judgement is filed against you. For your best chance to remove or satisfy a civil judgment filed against you, speak with Milwaukee bankruptcy attorney Steven R. McDonald today. Get yourself out of a financial hole and begin to rebuild your life.
Objecting To Confirmation / Motion To Dismiss / Proof Of Claim
In a Chapter 13, the debtor must propose a plan and the plan must be confirmed by order of the Court. The plan must propose to pay back any DSO arrearage in full and must list the DSO as a priority unsecured debt . If the debtor spouse fails to properly list or account for the debts owed to the non-filing spouse, then the non-filing spouse should file an objection to the confirmation of the plan.
Additionally, if the sole purpose of the filing of the bankruptcy was to frustrate the collection of the amounts owed to the non-filing spouse, then a Motion to Dismiss for a bad-faith filing should be considered. See In re Ellis, 406 B.R. 736
Lastly, the non-filing spouse should file a proper proof of claim to ensure that they are paid and have not waived any claim to any amounts that they are owed.
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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What To Do About The Lawsuit
First, don’t panic. Remember that anyone can sue anyone as long as they pay the clerk’s filing fee. Just because you have been sued does not mean you have done anything wrong. However, you must comply with the court’s procedure; this involves responding to the complaint.
Generally, there are two ways to respond to a complaint: filing an answer or filing a motion to dismiss. Most individuals without attorneys will want to file an answer, as a motion to dismiss can be complicated and requires an understanding of the law.
Many bankruptcy courts will have forms for debtors who represent themselves to answer complaints. These forms will usually be check-the-box style and allow you to generally deny all of the allegations of the complaint. However, you should still consult an attorney.
Bankruptcy Can Discharge Money Judgments
If you have found yourself in over your head with debt, you might already have lawsuit judgments against you. Creditors commonly file breach of contract claims against debtors over unpaid credit card debt, personal loans, and medical bills.
If you don’t respond to the creditor’s lawsuit and a default judgment is entered against you, or you do respond to the lawsuit and you lose, the court can enter an order against you for the debt you owe and other costs, including attorney and filing fees.
The money judgment may allow your creditor to garnish your wages or bank account, or take your assets in order to collect on the outstanding debt. Many people wonder if filing bankruptcy can get rid of the judgments and stop wage garnishment. Oftentimes, it can, depending on the type of original debt.
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Will Filing For Bankruptcy Stop A Civil Lawsuit Or Get Rid Of A Court Judgment
Filing for bankruptcy will stop some civil lawsuits in their tracks, which can be great if youre facing uncomfortable discovery, like testifying at a deposition. But filing earlier rather than later has other benefits, too. Its much easier to take care of a debt in bankruptcy before you lose a lawsuit and receive a money judgment.
Even so, if you already have a judgment against you, filing for bankruptcy can still help. In this article, youll learn what bankruptcy can do to help with civil lawsuits and judgments.
When A Creditor Tries To Obtain A Judgment After A Corporation Files For Bankruptcy
We mentioned the automatic stay associated with Chapter 7 bankruptcy. The automatic stay not only prevents creditors from continuing to collect, but it also stops any pending lawsuits against the corporation, and it also prevents creditors from filing new lawsuits against the bankruptcy business through the bankruptcy proceedings.
Yet as we mentioned above, since a corporation does not get a discharge in a Chapter 7 bankruptcy, it may be possible for a creditor to continue to attempt collecting from particular individuals even when the corporation has been closed. Indeed, if you are personally liable for any debt associated with a corporation or an LLC, then you can still be liable for that debt even after that business goes through a Chapter 7 bankruptcy.
Who can be held personally liable for the debt of a corporation? The answer depends upon the specific business structure and roles that were assigned when the business was formed. While corporations usually are designed to shield individuals from personal liability for the corporations debts and obligations, there are some circumstances in which directors, shareholders, officers, and even members of a corporation can be held liable for a corporations debts. This is a process that is known as piercing the corporate veil, and it can occur when a court determines that individuals associated with the corporation should be held personally liable for the companys debts.
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Can Collection Agencies Garnish Wages
Yes, if they have obtained a court judgment against you. The amount they can garnish and how that garnishment will be handled depends on what type of debt you owe, where you live, and your income. To learn how much money could be garnished from your wages, talk to a Licensed Insolvency Trustee. See also this page: How To Stop a Wage Garnishment.
Guardian Ad Litem Fees
Guardian ad litem fees that are ordered to be paid by the debtor spouse will be non-dischargeable. This is because the GAL is hired to protect the interest of the minor child, and the interest that they are protecting is the support and maintenance of the child. Thus, the GAL fees are in the nature of support and non-dischargeable pursuant to 11 U.S. Code § 101 and 11 U.S. Code § 523.
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When Can You File Bankruptcy On A Judgment Ask A Charlotte Nc Bankruptcy Lawyer
Can you file bankruptcy on a judgment? The simple answer is yes, but avoiding liens through bankruptcy can be a tricky;process. The best way to protect yourself is to consult an experienced Charlotte NC bankruptcy attorney. At the Law the Office of Jack G.;Lezman,;PLLC, we can help you understand your options. Contact us today for a consultation.
Can A New Judgment Against Me Stop The Filing
If a creditor already has a judgement against you, thats not a reason to delay filing for bankruptcy. Actually, youll want to file as quickly as possible in order to stop the judgement creditor from garnishing wages or taking your property. Share the details of the judgment with your bankruptcy attorney and discuss what it means going forward. In some cases, the judgment can be discharged. In other cases, it will be wrapped into your bankruptcy plan for repayment. It depends on your financial situation and whether you opt for Chapter 7 or Chapter 13 bankruptcy.
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Bankruptcy Stops A Judgment
Filing a consumer proposal or bankruptcy provides a stay of proceeding which stops most creditor actions for judgment debts including garnishments and can unfreeze a bank account.
There are exceptions. Certain debts are not eligible for discharge in a bankruptcy including debt related to fraud or misrepresentation, court-imposed fines, student debt less than 7 years old, and child support or alimony. Neither a judgment debt or garnishment can be stopped for these debts.
However all other judgment debts can be eliminated through both a bankruptcy and a consumer proposal.
Read more:How to stop a wage garnishment
Child Support And Alimony In Bankruptcy
Child support and alimony will be the first of the unsecured claims to be paid among all your other unsecured creditors. Keep in mind that child support and alimony obligations cannot be discharged through either Chapter 7 or 13 bankruptcy. See bankruptcy laws 11 U.S.C. § 727 & 1328. You will be required to continue payments to your former spouse during your bankruptcy case and after your discharge.
If you receive child support or alimony, you can protect that income in bankruptcy. See bankruptcy law 11 U.S.C. § 522. The entire amount that you receive for child support or alimony will be protected. Therefore, the bankruptcy trustee cannot take that income away from you.
if you are behind on child support and/or alimony obligations, filing Chapter 13 may help.; You would be required to pay all child support and alimony in full through the Chapter 13 repayment plan. However, this can be beneficial to the debtor filing bankruptcy. Including child support or alimony can reduce the amount you have to pay the banks and other creditors.
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Removing A Judgment Lien From Your Property
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As a general rule, liens placed on your property prior to filing will survive after bankruptcy. There are exceptions to this rule!
Your attorney can avoid some liens using tools built into the bankruptcy code. Still other liens can be satisfied after you have received your bankruptcy discharge by using Wisconsin law.
Bankruptcy cant get rid of every judgement lien, but there are many types of judgment liens that can be eliminated through bankruptcy. It is important to consult with an attorney to determine if these laws can help you.
For more information regarding elimination of certain liens, schedule a free appointment with Attorney Steven R. McDonald today to discuss your bankruptcy options.
What Happens If I Do Nothing
If you do not file an answer, the plaintiff can ask the court for entry of a judgment in the amount stated in the complaint.
If no amount is stated for damages in the complaint, the plaintiff has to put on proof of the amount of damages. ;Generally, unless you answered the complaint, you cannot participate in the hearing to set the damages.
Once a judgment is entered, the plaintiff can obtain a;lien on your assets and can use the services of the sheriff to levy on your bank accounts and garnish your wages .
If all of your assets and income are;exempt;under the law of your state, and you expect that situation to continue well into the future, you may be able to ignore the suit altogether.
Even after a creditor gets a judgment, you can negotiate with the creditor for the payment of the judgment.; Since the creditor incurs expenses and delay in using legal processes to collect a judgment, you can sometimes negotiate a discount on the judgment for voluntary payment.
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Can You Exempt The Property In Bankruptcy
When you file for bankruptcy, you’re allowed to keep or “exempt” a certain amount of property. If the judgment lien gets in the way of this right, the court will likely agree to avoid it so that you maintain clear property ownership. If you aren’t entitled to exempt the asset, or if the lien is another typesuch as a voluntary lien given when purchasing a house or carthe lien will remain in place.
Example 1. Henry can exempt $5,000 in equity in a car. His vehicle is worth $4,000, allowing him to protect it in a Chapter 7 bankruptcy. However, in his state, a creditor with a judgment automatically gets a lien against all of the debtor’s personal property, including a car . His attorney files a motion asking the court to avoid the lien. Because Henry can entirely exempt the vehicle, the court agrees.
Example 2. Tiffany’s credit card company obtained a judgment for $25,000 and filed it with the Stoney County recorder’s office, giving the credit card company a lien on all of Tiffany’s real estate in the county. An exemption doesn’t cover Tiffany’s cabin. Even though she can wipe out the credit card debt in a Chapter 7 bankruptcy because the property is nonexempt , the court won’t remove the lien. After the bankruptcy, the credit card company can sell the cabin and recover the lien amount.
For more details, see What Happens to Liens in Chapter 7 Bankruptcy?
Is The Judgment Based On Dischargeable Or Non
Whether or not you can file bankruptcy on a judgment depends on whether the judgment is for dischargeable or non-dischargeable debt. If you are being sued over dischargeable debt , bankruptcy will eliminate it.
However, if the judgment is based on non-dischargeable debt, filing for bankruptcy cannot eliminate it. Non-dischargeable debt includes tax debt, child support, alimony, most student loans, and others.
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Can You File For Bankruptcy To Avoid Paying A Judgment
Filing for bankruptcy is one option people have for handling debt or restructuring payments they are struggling to make. Unlike working directly with creditors, bankruptcy affords an individual or couple legal protections on both the state and federal levels that limit their creditors options. You can file for bankruptcy to pay back a delinquent mortgage, discharge medical debt or credit card debt, and, in some cases, avoid paying a judgment.
If you have a judgment against you, that means a creditor filed a lawsuit and obtained a court order indicating that you were legally required to pay the debt. A judgment grants a creditor legal options to collect the debt, including garnishing wages, accessing your bank account, or placing a judgment lien on your home. How the judgment will be treated in bankruptcy depends on a number of factors.
The Bankruptcy Code is complicated, so it is critical to speak with our experienced Philadelphia bankruptcy attorneys to understand how it could benefit your situation. While it is advisable to file for bankruptcy before a judgment is entered, you still have options after the fact. Call Young, Marr & Associates in Pennsylvania at 701-6519 or New Jersey at 755-311 to discuss the advantages of filing for bankruptcy.
Why A Judgment Lien May Not Be Troubling
A judgment does not last forever. In the event that the judgment is considered a lien against your property, you may not be concerned if you dont intend to sell the property before the judgment expires.
Judgments expire;in;10 years under both California and New York laws. In both states, however, the creditor can apply for an extension of the judgment to get 10 more years to collect the debt.
In addition, if youre in New York you have the option of going back to state court to seek a discharge of the judgment after a certain amount of time has passed since your bankruptcy discharge. Learn more about that here.
If you go through Chapter 7 bankruptcy and have a judgment but dont expect to need to sell your property within the time thats left for enforcement, you may decide to do nothing. Its a decision you need to make with your bankruptcy lawyer.
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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. That’s why it’s 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 To Avoid Judgment Liens In Bankruptcy
The following three elements must be proven to the court to avoid a judgment lien in your bankruptcy case:
- The lien is attached to a debt that is dischargeable;
- You have equity in the property the lien is based on; and
- The lien consumes a large portion of the equity in your property that could otherwise be exempted.
You are required to claim in your bankruptcy filing the right to exempt equity in your property in order to avoid a judgment lien. You must show proof that you need an exemption to release equity that has been consumed by the lien. Also, you must file a lien avoidance action.
Avoiding liens through bankruptcy can be rather challenging. Consult with a Charlotte bankruptcy attorney to discuss how you can file bankruptcy on a judgment. Contact Arnold & Smith, PLLC, to get help with your bankruptcy case: Call us at 704-370-2828 right now to get your consultation scheduled or find additional resources here.
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