How To Sue For Fraud To Avoid A Defendants Discharge In Bankruptcy
The following is an example of the type of language that needs to be pled in a complaint to alleged fraud to ensure that a debtor cannot discharge the debt in bankruptcy after the lawsuit is complete.
These elements must be alleged verbatim, combined with underlying facts, in the Complaint. In addition, you must ensure the judge includes these in the courts Findings of Fact:
Fraud must be pled with specificity regarding the facts that support the claim. Courts may also have other fraud pleading requirements.
After Filing Your Answer
After you file your answer, the court sets a hearing date. You are not required to hire an attorney, but it can be beneficial to have an attorney working on your behalf. An attorney understands the various defenses you may use to avoid a judgment. An attorney also understands the court process and how to investigate and gather evidence that could be used to win the case.
At the hearing, each side presents the facts and arguments they believe support their position. If the other party proves its case, the judge can order that you compensate the party for the amount you owe plus other costs and fees. A judgment is entered on the record and filed with the clerk of court.
The laws of each state vary slightly regarding how long a judgment remains active. In many cases, judgments remain active for at least ten years. Active means that you have a legal obligation to pay the debt and the party that you owe can take further legal action to collect the debt. In some states, a party can renew the judgment for an additional period to keep it active.
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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Bankruptcy Will Not Automatically Remove Liens From Your Property
When you receive a bankruptcy discharge, it wipes out your liability for all discharged debts. You will no longer be obligated to pay those debts, and creditors can’t sue you personally to collect them. However, simply filing for bankruptcy does not automatically remove any liens that were placed on your property before filing your case.
If a creditor obtains a lawsuit judgment against you, it can enforce that judgment in different ways, including garnishing your wages, levying your bank accounts, or placing liens against your properties such as your house. If a judgment lien has been placed on your property, you must file a motion with the court to remove it. Learn more about lien avoidance in bankruptcy.
Is The Judgment For A Nondischargeable Debt
When determining whether bankruptcy will wipe out a judgment, start by asking whether the underlying debt is nondischargeable. Nondischargeable debts include the following:
- student loans
- child support or spousal support obligations
- debts owed to government entities , and
- death or injury awards caused by driving while intoxicated.
If the judgment doesn’t fall into a nondischargeable category, don’t assume that you’re off the hook just yet. Other types of debts might be nondischargeable if the creditor files an objectionmost notably, obligations related to fraud. The creditor’s process to ask the court to find a debt nondischargeable is to file an adversary proceeding. The following types of debts often trigger an adversary proceeding filing:
- injury caused by a willful or malicious act, such as assault
- fraud used to obtain money, goods, or services, such as lying on a credit application, or
If the judgment doesn’t relate to these categories, and the creditor doesn’t object to your discharge, you can discharge the lawsuit judgment in Chapter 7 bankruptcy. But a lien still might remainwhich means you’d still end up losing the property or paying an amount equivalent to the owed amount unless you have the lien removed.
For more information, read Nondischargeable Debts in Chapter 7 Bankruptcy.
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Is It Ever Too Late To File A Bankruptcy Case
The short answer is: No, it is never too late.
But there can be consequences to waiting.
Most people wait until the last possible moment before considering bankruptcy as an option.
They make decisions and act, or fail to act, without getting all the necessary information.
The longer they wait, the more options disappear and the more problems arise.
As I discussed in my article on When You Should File Bankruptcy, it is always better to consider your bankruptcy and non-bankruptcy options earlier, rather than later.
Doing so enables you to minimize the costs and problems, and maximize the benefits of filing a bankruptcy .
However, as long as you are eligible to file under one of the bankruptcy chapters, you can still eliminate or restructure debts that are owed after a lawsuit is filed and even after a judgment has been entered against you.
The fact that there is a lawsuit or judgment does not affect affect your bankruptcy options, unless the judgement had a finding of fraud or other element that is excepted from discharge in bankruptcy .
It is, nevertheless, usually best to file bankruptcy before a judgment is entered. Because once that occurs, the creditor can garnish wages or seize bank account funds up until a bankruptcy case is filed.
The creditor can also then place a lien against property, which may or may not be removable in bankruptcy. .
Bankruptcy May Result In Removing A Judgment Lien Placed Against Home
You can avoid judgment liens on property resulting from creditors judgments when filing Chapter 7 bankruptcy if the lien is on exempt property.
Bankruptcy is a powerful debt relief tool. Not only can you discharge your personal obligation to pay your debts at the end of the bankruptcy case, but in some cases you can also eliminate judgment liens from your property.
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May The Debtor Pay A Discharged Debt After The Bankruptcy Case Has Been Concluded
A debtor who has received a discharge may voluntarily repay any discharged debt. A debtor may repay a discharged debt even though it can no longer be legally enforced. Sometimes a debtor agrees to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtor’s reputation is important, such as a family doctor.
How Does Bankruptcy Affect Court Judgments
local, state, and federal taxes. There are both federal and state laws in play when debtors filing for bankruptcy are also subject to court judgments. It is ultimately up to a bankruptcy court to determine which debts are dischargeable and which ones are not. Courts are bound by the law in this regard. Debts are not open to interpretation.
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Removing A Judgment Lien From Your Property
|Get a free consultation about getting out from under debt & removing civil judgments.
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.
If You Gave The Wrong Information To Get Credit
You might have given a lender the wrong information if you told them something that wasnt true, or if you didnt tell them something they asked you about.
If you gave a lender the wrong information, the official receiver might decide you took out the debt by fraud.
The official receiver has to take your circumstances into account when they decide if its fraud. For example, they have to take into account if the lender told you to say you were earning more than you actually were, so you could get the loan.
If you took out any of your debts by fraud, you have to start paying them again after your bankruptcy ends.
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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.
How Chapter 7 Bankruptcy Clears Judgements
Most personal judgments are dischargeable in a Chapter 7 bankruptcy case. When you file Chapter 7, you list the judgment holder in your bankruptcy forms. The judgment holder receives notice of the bankruptcy from the Bankruptcy Court. The party may object to the discharge based on bankruptcy laws. However, only certain judgments are non-dischargeable in bankruptcy.
Examples of personal judgments that are not dischargeable in bankruptcy include judgments related to:
- Restitution for a crime victim
- DUI accident cases
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Judgment Liens V Other Secured Debt
A judgment lien is treated differently than some other types of secured debt in bankruptcy. Thatâs because bankruptcy exemptions protect certain property from creditors–even a judgment creditor.
To illustrate, letâs look at two different scenarios involving a lien on a motor vehicle. If you have an outstanding balance on your car loan and the automobile was pledged as security when you purchased the car, bankruptcy doesnât undo that pledge. Bankruptcy may relieve you of personal responsibility for the debt, but the security interest remains. The secured creditor–the lender who provided the purchase money for your car–has a contractual right to take back the car if you donât pay. Under some circumstances, the bankruptcy court may be able to reduce the amount due. But, you canât simply keep the car and discharge the debt.
A judgment lien is different because there was no security contract – you didnât voluntarily grant the creditor a lien. Instead, this type of lien is entered in an attempt to collect a debt. That means exemptions apply, and you may be able to avoid the lien. Imagine that youâve filed using federal exemptions, and that your car is worth $3,000. Your credit card company has a $5,000 judgment against you, and has placed a lien on your car.
The federal exemption protects up to $4,000 in value in a motor vehicle. That means the full value of your car is exempt and the judgment lien can typically be avoided.
Confused About Which Of Your Debts Are Dischargeable
A personalized review of your circumstances with an experienced bankruptcy lawyer is the best way to understand what bankruptcy can and cannot accomplish in your case. Plan now to reclaim control of your financial future. Take advantage of a free initial consultation with an attorney at Fesenmyer Cousino Weinzimmer at one of our offices in Columbus, Dayton or Cincinnati.
Our Ohio bankruptcy lawyers are prepared to evaluate your financial situation and find the best form of debt relief suitable to your goals and circumstances.
Send an inquiry by email or call 614-228-4435 , 937-222-7472 , or 877-654-5297 .
Talk to the skilled, experienced attorneys at Fesenmyer, Cousino and Weinzimmer. Trust our knowledge and count on our help. We offer free initial consultations.
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How Can The Debtor Obtain Another Copy Of The Discharge Order
If the debtor loses or misplaces the discharge order, another copy can be obtained by contacting the clerk of the bankruptcy court that entered the order. The clerk will charge a fee for searching the court records and there will be additional fees for making and certifying copies. If the case has been closed and archived there will also be a retrieval fee, and obtaining the copy will take longer.
The discharge order may be available electronically. The PACER system provides the public with electronic access to selected case information through a personal computer located in many clerks offices. The debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically.
What Effect Does Bankruptcy Have On Judgments
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 dont 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.
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Whats A Judgment Lien And Why Should I Care
A judgment is a court order. This court order can be turned into a judgment lien that can attach to real estate like your home. The process for this depends on state law. Judgment liens can turn your unsecured debt into a secured debt. A bankruptcy judge can make a judgment lien go away if the only real property you own is covered by an exemption.
Can Bankruptcy Remove A Ccj From Your Credit Report
No, a CCJ will still be listed on your credit report for six years from the date it was granted. This is something to be aware of if you want to apply for credit in the future. However, the impact of bankruptcy is much greater than a CCJ, so either way you may struggle to get accepted for credit once it is complete.
You should check back to ensure the CCJ is marked as complete once your bankruptcy is over and that it is removed after six years. You can contact the three credit reference agencies Experian, Equifax and directly to have this amended.
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What Are The Consequences For A Bankrupt Of Not Being Discharged
Not being discharged has important consequences for a bankrupt.
A person who is bankrupt may not borrow more than $1,000 without informing the lender that he/she is bankrupt. Failure to do so is an offence under the BIA that is liable to a fine, imprisonment or both.
Information pertaining to bankruptcy remains on an individual’s credit file for 6-7 years following discharge of a first-time bankrupt. Times may vary across provinces/territories.
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