Can Bankruptcy Erase my Judgment?
Contrary to what some people might believe, filing for bankruptcy does not wipe away all debts, only some of them. Records of your judgments are unchanged as well. Which judgments disappear depend on the type of judgment and what chapter of bankruptcy you are filing. Federal law covers what judgments can or can’t be erased but it is important to be aware of the law in your state as well; sometimes federal law leaves the decision up to state courts.
If you have had a judgment granted against you, the entity that sued you can garnish your wages, levy your bank account, seize your assets, or get liens on your property. Multiple judgments could lead to multiple garnishments and so on. A bankruptcy court can give an order for an automatic stay to either discharge your debt or supervise a payment plan.
Some judgments cannot be discharged. Alimony, back child support payments, damages caused from DUIs, student loans, and some tax debts cannot be discharged by a bankruptcy. Chapter 7 bankruptcy will make most of your other judgments uncollectable but still cannot discharge the previously listed judgments. Chapter 13 will usually lower the amount you owe on debts but judgments for child support or DUI damages must be repaid in full. Court fines are not considered judgments and must be repaid under Chapter 7 and Chapter 13 bankruptcy. Do not ignore them or you can lose your driver’s license or even go to jail!
While bankruptcy courts can discharge the debt and restrain your creditor’s collection efforts they cannot remove a judgment from public records or your credit report. In fact judgments remain on your credit report for at least seven years after bankruptcy; 7 years for Chapter 13 and 10 years for Chapter 7. If you do not fully pay them they stay until the debt expires or until the statute of limitation runs out.
When you are going through the bankruptcy process make sure you are completely honest with your lawyer and everyone associated with the court. Even if a bankruptcy court decides to discharge your judgments they will reinstate them later if they find out you were dishonest. On top of that you will probably face more penalties and possibly jail time. Even if it may the truth may hurt you it is far better to be honest than be caught in a lie.
As you can tell, declaring bankruptcy to remove existing judgments is very complex decision to make. Every case is unique and every jurisdiction handles them slightly differently. It is very important that you hire an attorney to advise you through these proceeding and determine if declaring bankruptcy is the right decision for you. If you have are considering bankruptcy you can contact Stone Law at 732-444-6303 or leave us a message on our website.