Will Filing for Bankruptcy Get Rid of a Judgment?
Once you have a judgment against you, a creditor can garnish your wages or your bank accounts until you pay off the entire debt. Bankruptcy can affect judgment depending on the type of bankruptcy you file -- Chapter 7 or Chapter 13.
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Judgment Defined
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A judgment is a legal document granted by a court allowing a creditor to garnish your wages or seek other remedies to collect the money you owe him. A judgment is good for the time allowed by your state. Creditors often can renew judgments, but they still have a statute of limitations and will expire after a certain time. To check your state's statute of limitations on judgments, visit the website Creditreport.com.
Bankruptcy Defined
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Bankruptcy is a legal process where you can petition the court to eliminate or reduce your debt. A Chapter 7 bankruptcy is for filers who do not have assets to cover the debt. A Chapter 7 will eliminate most of your debts with some exceptions, such as child support and criminal restitution. Chapter 13 bankruptcy will reduce the amount of debt you owe and place you on a payment plan you can afford.
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Bankruptcy and Judgments
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A bankruptcy can get rid of or reduce a judgment. A Chapter 7 bankruptcy will clear a judgment. In Chapter 13, the trustee assigned to your bankruptcy case will review your income and your debt. She will work to reduce all of your debt to an affordable amount that you can afford. How much the trustee reduces a judgment will vary based on the case. Whether Chapter 7 or Chapter 13 the bankruptcy process will halt any garnishments taking place due to a judgment.
Other Options
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Once a court grants a judgment, you are powerless to stop the creditor if you do not file bankruptcy. You can contact the creditor to attempt to work out a payment schedule, settlement or other agreement, but the creditor has the judgment authorizing him to garnish your wages. It is not easy to negotiate with a creditor once a judgment is in place.
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