How to File Bankruptcy on Judgments Awarded in Small Claims Court
Federal law grants individuals overwhelmed with personal debt the option to file for bankruptcy protection from their debtors and to have some or all of their personal debt discharged. Non-business entities can file for Chapter 7 or Chapter 13 bankruptcy protection. Under Chapter 13 bankruptcy, individuals work out a plan to pay back a reduced amount of money to their creditors in a set period of time. Chapter 7 allows filers to get rid of all unsecured debt, including money judgments that may have been awarded against them in small claims court.
Other People Are Reading
Things You'll Need
- Attorney or bankruptcy petition preparer
- Chapter 7 bankruptcy petition and accompanying schedules
- Federal court filing fee
- Valid name and address of every entity to whom you owe money
Instructions
-
-
1
Have an attorney or a bankruptcy petition preparer prepare all the documents you need to file for Chapter 7 relief, including the petition and accompanying schedules. If you have a simple case and an understanding of how the laws will affect you, you can hire a bankruptcy petition preparer to draw up the documents and represent yourself. Make certain to list every single debt, no matter how tiny, in the initial paperwork.
-
2
File your Chapter 7 paperwork in federal court. As of 2010, the court charged a filing fee of $245, an administrative fee of $39 and a trustee surcharge of $15. These costs are in addition to any fees you pay the attorney or bankruptcy petition preparer. Filing fees change from time to time, so be sure to call the court and verify how much you will need to pay to file the bankruptcy and what types of payment they will accept.
-
-
3
Attend the creditor's meeting, which will be scheduled between 21 and 40 days after your petition is filed. You will attend this meeting with your bankruptcy attorney if you have one. At this hearing, you will meet with the bankruptcy trustee, a neutral party assigned to oversee your case, and answer his questions. Your creditors can also attend this meeting, including the person who holds a judgment against you from a small claims court action, who can find out whether or not he is eligible to collect any money from your estate. Almost all Chapter 7 cases filed by individuals are no-asset cases, so creditors are rarely able to receive any money.
-
4
Receive a discharge from the bankruptcy court within 60-90 days of the creditor's meeting. This discharge wipes out all of the debts that were filed with your petition, including the small claims court judgment. Creditors included in the bankruptcy can no longer take any action to require you to pay the debt.
-
1
Tips & Warnings
Before filing, consult with an attorney to make certain you pass the "means test," which determines if your individual situation makes you eligible for relief from Chapter 7 bankruptcy.
From the time you file for Chapter 7 with the court until you receive your discharge, an automatic stay stops your creditors from trying to collect any money you owe them. The clerk of court sends out notices to the party who holds a judgment against you from small claims court and any other creditors listed in your bankruptcy paperwork to let them know you have filed for Chapter 7 relief, which takes a week or so.
Between the time you file and the time you attend the creditors meeting, you can reaffirm some secured debts (such as an automobile) that are attached to property you wish to keep. If you sign a reaffirmation with a creditor, that debt will not be discharged with the rest of your debts at the end of your bankruptcy case.
If you are ineligible to file under Chapter 7 and file instead under Chapter 13, you will have to pay back some of what you owe to debtors.
If the entity who was awarded a judgment against you in small claims court has used that judgment to file a lien against your property, a Chapter 7 discharge will not erase that lien.
Filing for Chapter 7 bankruptcy may result in the loss of some of your property.
Alimony, child support and back taxes cannot be wiped clean with a Chapter 7 discharge.
References
Resources
- Photo Credit legal pad and mechanical pencil image by alpy7 from Fotolia.com
