Will Filing Bankruptcy Eliminate a Judgment?

In general, filing Chapter 7, 11, or 13 will eliminate judgments against you, including debt, liabilities, and torts. The official term for this is discharge. However, not all debts can or will be discharged.

To understand this a little better, there are basically 2 Types of liability: “In Personam” and “In Rem.”

• In Personam means “against the person.”
• In Rem means “against the thing.”

Bankruptcy discharges your “in personam” liability. However, bankruptcy does not discharge the “in rem” liability concerning things you may own.

For instance, if you have a house with a 1st mortgage on it and you also have a judgment lien, there are several things to consider. If you want to keep the house then you must also keep the 1st mortgage and keep making the payments. If the judgment lien impairs your homestead equity in your primary residence, then filing bankruptcy alone is not enough. You would also need to file a Motion in bankruptcy court to strip off the judgment lien. Otherwise, the judgment lien would continue to exist “in rem” i.e. against your house. Talk to your bankruptcy lawyer about this type of situation.

Liability resulting from lawsuits over a loan default, breach of contract, nonpayment of credit cards, and negligent torts can be discharged.

Some debts are beyond discharge, however. These include:

• Debts not discharged in a previous bankruptcy
• Taxes
• Debt incurred as the result of a DUI accident that caused injury or property damage
• Debts, liabilities or restitution resulting from a criminal judgment
• Credit card withdrawals, debt for luxury services, or new lines of credit incurred within three months of filing.

Any transactions and debts incurred within 90 days of filing are looked at more carefully than others. Giving away property, luxury items, or paying off debts to friends or family can be viewed as acts of fraud.

It’s important to list these debts correctly or you run the risk of being accused of fraud later, even if the courts and your creditors do not realize the mistake at the time. Even if these kinds of debts are discharged during bankruptcy in error, it’s important to note that the debt is still enforceable and, you can even be charged with fraud for trying to obtain an illegal discharge.

It is important to disclose everything to your bankruptcy lawyer so they can best advise you on your course of action to make sure things go as smooth as possible.

Over the past 32 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.