What is Judgement proof in bankruptcy?
Judgment proof is a description of a person who does not have enough assets for a creditor to seize when a court order requires debt repayment. A debtor who is broke and unemployed can be considered judgment proof, as can a debtor who only has certain legally protected types of assets or income.
Can a judgment be avoided in a bankruptcy?
Some judgment liens can be eliminated, or avoided in legal lingo, in the course of a bankruptcy. A judgment lien is avoided if it applies to property you claim as exempt from liquidation or forfeiture in your bankruptcy.
Can you get rid of a judgment lien in bankruptcy?
In some situations, you can get rid of (avoid) judgment liens in Chapter 7 bankruptcy. A judgment lien occurs when a creditor sues you, gets a judgment against you, and files a lien against your personal property to satisfy the judgment. You can avoid judgment liens in a Chapter 7 bankruptcy under the right circumstances.
What happens when a judgment is filed against you?
In some states, a judgment automatically gives a creditor a lien right to all of your property. Other states require the creditor to file the money judgment with the recorder’s office, state secretary, or a similar office first. If you’d like more details, read How Creditors Enforce Judgments.
Can a creditor enforce a judgment against a debtor?
The court will divide the proceeds of these assets among creditors. However, bankruptcy generally only lasts for three years and one day. Therefore, a debtor may return to a financial status that enables a creditor to enforce a judgment against them.
Can a bankruptcy stop a judgment against me?
Published: September 19, 2017. In general, filing Chapter 7 or 13 will stop judgments from being enforced against you, including debt, liabilities, and car accidents. Filing bankruptcy can stop garnishments as well. When you file a bankruptcy, you are asking the Court to discharge your debts. However, not all debts can or will be discharged.
What kind of judgments can be discharged by bankruptcy?
If a creditor obtains a judgment against you for a nondischargeable obligation, filing for bankruptcy will not discharge that judgment. Some of the most common types of nondischargeable judgments include those related to or arising out of: domestic support obligations such as child support and alimony.
Can a judgment be garnished if you file bankruptcy?
If your lender obtains a judgment, it can garnish your wages or go after your personal assets to satisfy the outstanding judgment. Fortunately, filing for bankruptcy can stop the garnishment and wipe out your obligation to pay back discharged debts. If a lawsuit is still pending, the bankruptcy’s automatic stay will stop it from moving forward.
How does a deficiency judgment work in Chapter 7 bankruptcy?
However, if the lender placed a lien on any of your properties using the deficiency judgment, Chapter 7 bankruptcy will not automatically remove that lien (your discharge only eliminates your personal liability for debts). In that case, you will have to file a motion and ask the court to avoid the lien.