If I Get a Judgment From Someone & He Files for Bankruptcy Can I Ever Get My Money?
A debtor files for bankruptcy when he is unable to pay their debts and is looking for protection from creditors and collections activity. In many instances, a bankruptcy discharge also eliminates any lawsuit judgments the debtor is obligated to pay. If someone owes you money in a court judgment, the circumstances surrounding that judgment will determine whether he can discharge the judgment in bankruptcy.
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Judgments for Loans
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If you made a loan that the person failed to pay, or sold merchandise that he did not pay for, you may have filed a lawsuit against this person. A judge may have given you a judgment for the amount that they owed you, including any fees and costs that you have incurred for collecting this money. If that person then files for bankruptcy, a court will consider this dischargeable debt unless there are unusual circumstances. Without any further requests from you, the debt will most likely be automatically discharged in a Chapter 7 or Chapter 13 bankruptcy with the debtor's other eligible debt.
Judgments Involving Fraud
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If a debt were obtained by the borrower using false pretenses or other fraudulent activity, it would generally not be dischargeable under bankruptcy law. The same would apply to a judgment received for a debt that involved fraud. This determination is not automatic, however, and you must ask the bankruptcy court to exempt a judgment from discharge based on the fraudulent activities of the debtor. The court will convene a hearing separate from the bankruptcy action to determine whether the original debt involved fraud. If the court rules that it did, the court will exempt the judgment from the bankruptcy regardless of the type of bankruptcy the debtor filed.
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Drunken-Driving Judgments
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If you were injured in an accident caused by a drunken driver, and you successfully sued the driver and recovered damages for your injury, your drunken-driving accident judgment has special protections from a bankruptcy. The bankruptcy law specifically states that debts resulting from a person driving while intoxicated and causing personal injury are not able to be included in bankruptcy. The same applies to a willful and malicious injury or property damage debts that arise from the malicious acts, except the latter can be discharged in a Chapter 13 case.
The Reality
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Even though a judgment might not be eligible for bankruptcy protection, collecting your money may be difficult -- if not impossible. You will, in most cases, need to file a motion with the bankruptcy court to bring an adversarial proceeding. This is a separate lawsuit outside of the debtor's bankruptcy action. A judge will have to find in your specific case that the debt should not be included in bankruptcy. Even if a judge excludes your debt, it will be difficult to collect a debt from someone who has filed for bankruptcy and probably does not have the means to pay the judgment. If you can collect, it may take many years to do so.
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