If I File Bankruptcy After A Judgment Is Placed Against Me, Will It Erase The Judgment?
Understand that the rules covering bankruptcy and judgements can vary from state to state, but there are several aspects that are similar. Since in the fairly recent past some people have declared bankruptcy to avoid paying valid debts, many states have changed the rules to place more accountability on the debtor. One of these accountability points is one similar factor based on the judgement type and the reason for the judgement.
Federal law indicates what debts can or cannot be erased. According to the U.S. Bankruptcy Code, bankruptcy will not erase criminal fines, student loans, DUI judgements, secured loan defaults, child support or tax obligations for federal, state or local taxes. However, it is possible to erase a credit card default judgement, but it will be up to the state’s bankruptcy court to decide. A creditor can also request that a judgement normally considered erasable be retained through the bankruptcy.
Next, be completely honest if you find yourself seeking legal counsel, and do not refrain from providing information to the court-appointed trustee or to the court judge. By law, you are required to surrender all facts and knowledge, but consult with your attorney to ensure that you are both on the same page. Any discrepancies can be considered to be fraud, and that is the last thing you want in these situations.
There will also be some exceptions that your attorney can identify based on your personal and family situation as well as the law in the state in which you reside. This is where a potential dismissal of a judgement would be considered. In the case of non-erased judgements, these types of decisions will often survive bankruptcy, and even some judgements that were cleared may still linger on your credit report.
It also needs to be said and understand that federal bankruptcy law protects you from bullying and fraudulent tactics committed by a creditor. For example, if an erased judgement is not removed from your credit report as required by law and you attempt to purchase a home only to find that this negative mark hindered the transaction, you have legal options if you request the removal of the derogatory mark and the creditor drags his or her feet. You will be entitled to file a lawsuit, and if you win, you can seek compensation for the loss of the ability to finalize a purchase of a property.