Can I get rid of a judgment in a bankruptcy? The answer is that it depends.
A judgment is an decision by a court. This occurs after a lawsuit has been filed, you have been served with the suit, and evidence has been provided to the court that the person or entity that has sued you is entitled to a judgment in their favor against you.
The rules for what has to happen to get a judgment against someone vary from State to State, but generally once a lawsuit is served, you will have a fairly short period of time to respond (answer) the lawsuit, or the court will enter what is known as a default judgment against you.
The type of judgment seen most often in a bankruptcy is a money judgment by a creditor such as a credit card company, pay day loan company, or loan company, and more often than not, the potential client has not answered the lawsuit so the judgment is a default judgment.
In its most basic sense, getting a judgment against someone is just another way of trying to collect on a debt, just like a creditor calling you or sending you a letter. However, unlike calls and letters, a judgment has teeth.
In Louisiana, where I practice, once a creditor has a judgment against you they can record that judgment in the mortgage and conveyance office of the Parish where you live or where you own real estate, they can force you to come into court to answer questions about the type of assets you have and where they are located, and they can garnish your wages or your bank account.
By filing a bankruptcy, the court stays all collection proceedings against you, including collection of judgments.
However, you should be aware that under Louisiana law, a creditor that has recorded a judgment in the mortgage and conveyance office has a judicial lien against any real estate you have.
A creditor such as a credit card company cannot force the sale of your home in Louisiana to satisfy a judgment, but the recording of the judgment may result in your having to pay it at a later time if you ever try to sell real estate, purchase real estate or inherit real estate.
Because of this, if you are sued it is generally a good idea to take some action to defend the lawsuit by filing an answer, or consider filing a bankruptcy before the judgment is rendered and recorded.
For additional information on judgments in bankruptcy, you may want to look at the article on the Bankruptcy Law Network written by my friend and co-contributor, Jonathan Ginsberg, entitled: “What Does It Mean to Have Judgment Filed Against You?”
by Kevin Gipson, New Orleans, Louisiana bankruptcy lawyer.