Can a Judgement be Wiped Out by Bankruptcy?

If you are thinking of bankruptcy as an option to get rid of your debt, as a Missouri bankruptcy lawyer, I know you have a lot of questions. A common question I hear is how a judgment will be affected if you file for bankruptcy. Many think that a bankruptcy can’t get rid of a judgment, but that is not true. If you are able to wipe out the type of debt that is behind a judgment, then you can wipe out the judgment along with it.

An example of a debt that you can get rid of by filing is credit card debt. So if a credit card company is suing you for failing to pay, and they win, a judgment is placed against you for that debt. In this type of situation, bankruptcy can help get rid of the credit card debt along with the judgment that comes along with it.

On the other hand, there are types of debt that are not normally wiped out by filing, such as child support, alimony, etc. If a judgment to collect any of these types of debt is placed against you, then filing probably won’t be able to wipe it out. That doesn’t mean it can’t help you, a Chapter 13 bankruptcy can help you reorganize the debt so you can pay it off in an easier way depending on your monthly income and expenses. When the Chapter 13 is complete, the judgment for these types of debt will be satisfied in full.

Between the two types of consumer bankruptcies, Chapter 13 and Chapter 7, the one you decide to file will not matter because judgments are wiped out with both types. The type of case filed really doesn’t determine how a judgment is treated because almost all judgments are for unsecured debts. Unsecured debts are wiped out in a chapter 7 bankruptcy, and almost all chapter 13 plans pay 0% to unsecured creditors so they wipe them out too.

No matter the type of consumer bankruptcy, the instant your case is filed, you will be protected by what is known as the automatic stay. The automatic stay basically keeps creditors from taking any further action to collect your debts. This means harassing debt collector calls, repossession, wage garnishment, etc. all stop.

As a Missouri bankruptcy lawyer, I do suggest that if there’s a lawsuit going on, you want to make sure to take care of it sooner rather than later. If you are drowning in debt, and don’t know how you’re going to pull yourself out, the best thing you can do is find information to arm you from devious creditors. That’s why I recommend that before you speak to an attorney, debt collectors, or sign any forms, you read my FREE book, “Get Out of Debt: Secrets Your Creditors Don’t Want You to Know.”