Judgments

It may be possible to discharge judgments in bankruptcy

A judgment is basically a piece of paper declaring that you owe a debt that is signed by a judge. The purpose of a judgment is for creditors to collect a debt. This will happen when a creditor feels the need to take a step beyond their routine collection attempts of phone calls, emails and letters.

Judgments typically come from credit card lenders, vehicle lenders or mortgage lenders who are seeking money that has not been paid. In order for creditors to obtain a judgment, they are typically required to file a lawsuit seeking the payment of debts. You will first receive notice of a lawsuit entered against you by a creditor before a judgment can be issued. The notice, also called a “Summons”, will detail how long you have before the judgment will be entered against you and what to do to prevent it.

Since a judgment is public record, it will appear on your credit report and can oftentimes significantly lower your credit rating. Judgments typically last for a period of 10 years. Creditors may also have the opportunity to renew the judgment near its expiration date.

If you have a judgment lien recorded against any property that you own, filing for Chapter 7 or 13 bankruptcy may be a way to get rid of them.

If you are able to meet the following three conditions, you may be eligible to remove the judgment liens on your property:

  1. The lien was the result of a money judgment that was issued by a court.
  2. The property is your personal residence and you qualify for the exemption.
  3. The property is worth less than the total of all mortgages on the property and your applicable exemption.

If you can avoid a lien, it is advisable to do so especially if they can be completely eliminated. Regardless of whether you want the property, it is recommended if at all possible to avoid liens on any property that qualifies for an exemption. The lien will be deleted without paying any money to the creditor and you will actually own the property.