Should you file bankruptcy to avoid judgment being entered against you? Not an uncommon question around here. First of all lets talk about what a judgment is all about: A judgment is the result when you are sued and either don’t respond to the lawsuit or lose the lawsuit. The judge, in finding in favor of the creditor, will award a judgment on their behalf. If your creditor obtains a judgment, they can garnish your wages or go after your personal assets to satisfy the outstanding judgment. Fortunately, filing for bankruptcy can stop most wage garnishments and wipe out your obligation to pay back discharged debts. There are only three ways to get rid of a judgment: a) Vacate it; b) Satisfy it, or c) Discharge it. Filing a bankruptcy to avoid judgment through a discharge is the option to take if the other options don’t pan out as most judgments can be discharged in bankruptcy. Notable exceptions are judgments based upon fraud and elder abuse. If you qualify for bankruptcy and otherwise feel that bankruptcy is right for you, you should consult an experienced bankruptcy attorney. Filing a bankruptcy petition will place an automatic stay on the judgment and any enforcement actions.
By filing bankruptcy, you are protected by an “automatic stay” which will stop the creditors from collecting from you or pursuing the judgment further. If the judgment has already been placed against you, you can still file a bankruptcy to get rid of it, but you will need to discuss with your attorney, your further actions. Many times, if you own a home, a judgment automatically puts a lien on your home, and although the bankruptcy will take care of the debt that you owe, separate motions will need to be filed to remove the lien from your property. Its advisable to explore the option of bankruptcy before you have a judgment against you if at all possible. If you already have a judgment against you, you will want to contact a bankruptcy attorney immediately to see what options you have to ensure that your property is protected. Also its important to note that the fact that there is a lawsuit or judgment does not affect your bankruptcy options, unless the judgement had a finding of fraud or other element that is excepted from discharge in bankruptcy. Nevertheless it’s 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. Additionally a creditor may then also place a lien against property, which may or may not be removable in bankruptcy.