Can Judgments Be Included in a Chapter 7 Bankruptcy?
The ultimate goal of a Chapter 7 bankruptcy is to obtain what is known as a discharge of your debts. A discharge relieves the obligation to repay your creditors. There are some limitations on debts that are subject to discharge. For example, you may wonder whether a judgment from a lawsuit can be included in a Chapter 7 bankruptcy.
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Considerations
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A judgment in a civil suit is a debt, a debt not that different from any other financial obligation you acquire.
Matrix
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When you prepare a bankruptcy petition you are required by law to prepare a complete matrix of creditors. The matrix is a list of all individuals and entities to which you are indebted. This includes judgment creditors.
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Types
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All judgments need to be included on your matrix. However, a limited number of judgments are not subject to discharge. The prime example is a judgment for past-due taxes obtained by the IRS. In most cases a debtor cannot be relieved of a federal tax obligation.
Automatic Stay
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By listing a judgment creditor in your matrix, that individual or business can take no further collection against you absent a specific order of the court. You benefit by including any such creditor in your case.
Discharge
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By including a judgment in your Chapter 7 bankruptcy and by obtaining a final discharge in the case, you permanently are relieved of any obligation for that debt.
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References
Resources
- Photo Credit Image by Flickr.com, courtesy of Andrew Magill
