Can I Get Rid Of A Judgment In A Bankruptcy?

Worried Piggy Bank

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 , New Orleans, Louisiana bankruptcy lawyer.

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Bankruptcy Stay Stops Debt Collection!

When you file a bankruptcy, the filing acts to stop all collection proceedings against you while you are in bankruptcy.  This is true whether you file a Chapter 7 or a Chapter 13 case.

The act that stops collection is known as an “automatic stay.”

The automatic stay prevents the following actions to collect a debt:

  • Telephone calls;
  • Collection letters;
  • Personal visists to your home;
  • Contacting friends and relatives;
  • Lawsuits;
  • Judgments;
  • Garnishments.

Secured creditors, such as a mortgage company or an auto finance company have the right to file a motion to lift the stay in order to proceed in court to enforce the lien they have on your house or car, but until the motion is granted by the bankruptcy court they cannot go forward with legal action against you.

If a creditor continues to try to collect from you it is at risk of being sanctioned by the judge in your Chapter 7 or 13 case.  A motion to enforce the stay and/or to seek sanctions from the court can be filed.

Sanctions can range from:

  • An award of monetary damages to you;
  • Attorney’s fees and court costs for having to enforce the stay;

by , New Orleans, Louisiana bankruptcy lawyer.

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They Went Broke Too: Former CSI Star Gary Dourdan!

Former CSI TV Star, Gary Dourdan filed for Chapter 11 bankruptcy in the bankruptcy court for the Central District of California on August 30, 2012.

Dourdan’s filing indicated that he had $1.8 million in assets, but owes his creditors approximately $1.73 million.

His assets listed on his bankruptcy schedules include:

  • $200.00 cash;
  • $3,000.00 in a bank account;
  • $4,000.00 in furniture;
  • $200.00 worth of  books;
  • $1,500.00 in clothes;
  • $500.00 in watches; and,
  • 2006 Dodge Charger worth  $7,000.

Dourdan indicates that he has average monthly income of $14, 883.00 and monthly expenses of $14,562, leaving only $321.00 per month to pay to his creditors.

Chapter 11 bankruptcy is normally used by major corporations that want to stay in operation and reorganize their debts.

In recent years since the 2005 enactment of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), Chapter 11 bankruptcy has become more common for individuals with assets and/or debts that exceed the Chapter 13 personal reorganiztion limits, but who also make too much money to qualify for a Chapter 7 bankruptcy.

It is reported that Dourdan anticipates having additional income available for his creditors as new acting opportunities become available.

by , New Orleans, Louisiana bankruptcy lawyer.

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Tropical Storm/Hurricane Isaac Closed New Orleans Bankruptcy Court

As a result of Tropical Storm/Hurricane Isaac, The United States Bankruptcy Court for the Eastern District of Louisiana  has announced that it will be closed on Monday, August 27 at noon through Thursday, August 30, 2012 at noon.

All matters before Judge Elizabeth W. Magner, Section A that are scheduled from August 27 through August 29 are cancelled and will be rescheduled.

Judge Jerry A. Brown’s motion day hearings for Section B that were scheduled for Wednesday, August 29, 2012 are cancelled and reset for September 19, 2012. However, Judge Brown will process orders that have no objections.

The CM/ECF will still be accessible filings, but the Clerk’s Office will not be issuing noticing, setting hearing dates, etc. until Thursday, August 30, 2012 when the Court anticipates reopening at noon.

 

by , New Orleans, Louisiana bankruptcy lawyer.

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Bankruptcy Court Orders Wells Fargo To Pay $3,171,154.00 In Punitive Damages In Jones v. Wells Fargo Case!

Judge Elizabeth Magner, Chief Judge of the Bankruptcy Court for the Eastern District of Louisiana has ordered Wells Fargo to pay $3,171,154.00 in punitive damages to Michael Jones in the Jones v. Wells Fargo Home Mortgage, Inc. case.  The judgment was rendered on April 5, 2012.

The case began in 2006 after Wells Fargo failed to account for funds it had received from Mr. Jones as post petition payments in his Chapter 13 bankruptcy.

Due to the significant award of punitive damages, it can only be assumed that Wells Fargo will appeal this decision.

The opinion was released on April 5, 2012.

by , New Orleans, Louisiana bankruptcy lawyer.

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Elizabeth W. Magner Appointed Chief Judge of New Orleans Bankruptcy Court

On August 23, 2011 the United States Bankruptcy Court for the Eastern District of Louisiana announced that Judge Elizabeth W. Magner has been appointed as Chief Judge of the Court.

Judge Magner’s appointment is effective September 1, 2011.

Judge Magner was sworn in as a Federal Bankruptcy Judge on September 9, 2005 shortly after Hurricane Katrina.

The Court is located in New Orleans, Louisiana.

by , New Orleans, Louisiana bankruptcy lawyer.

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IRS Form 1099C And Bankruptcy

You filed a bankruptcy and you have now received a 1099C from a creditor.  It shows that the debt you had with that creditor is income.

Do you have to pay taxes on the amount shown on the 1099C?

The answer is no, you do not have to pay taxes for this 1099C.

The reason the creditor issues a 1099C to you is that when a creditor compromises a debt or writes off a debt, the Internal Revenue Service will ordinarily treat the money you did not have to pay to the creditor as income.

Unfortunately, many tax preparers are unfamiliar with bankruptcy laws and do not realize that this debt was discharged in a bankruptcy.

A 2011 revision to Section 108 of the Internal Revenue Code clarifies that discharged debt is not income for tax purposes.

Your tax preparer only needs to attach IRS Form 982 to your return to deal with this issue.

 

by , New Orleans, Louisiana bankruptcy lawyer.

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Failure To Report Assets In Bankruptcy Can Result In Jail Time And Fines!

When you file a bankruptcy you must tell your attorney about all of your assets and debts.  In fact, several of the documents that you sign when filing a bankruptcy advise that your bankruptcy can be dismissed without a discharge, you can be fined up to $500,000.00 or imprisoned for up to 5 years for intentionally making false statements or concealing property from the bankruptcy court.

The Monroe, Louisiana newspaper, The News Star  recently reported on the conviction of a Monroe woman, Harriett King, for multiple counts of bankruptcy fraud, including misrepresenting herself to individuals as a bankruptcy lawyer, and also for failing to disclose assets in her personal bankruptcy filing.

King owned a business known as HL King and Associates Inc. and claimed to provide legal services.

Testimony in Ms. King’s trial established that Ms. King, a bankruptcy petition preparer, receive legal fees and court costs on at least three occasions from debtors by representing to the debtors that she was an attorney.

The bankruptcy code does permit a debtor to use the services of a bankruptcy preparer, but a bankruptcy preparer cannot give legal advice.  In other words, a bankruptcy preparer must take the information provided by the debtor and prepare the bankruptcy documents, not advise the debtor on what to put in the documents.

Further, when Ms. King  filed her own personal bankruptcy petition, it was found that she fraudulently claimed to own property she did not own and omitted debts she was required to disclose.

Besides the obvious risk of fines and jail time, there are various exemptions available that allow debtors in both Chapter 7 and Chapter 13 bankruptcy to keep most or all of their assets when they file for bankruptcy.  

Additionally, even if the property is not exempt, it might not have actual value to the court and you can keep it anyway.

Finally, if a debtor wants to keep a non-exempt asset, a trustee in bankruptcy will frequently agree to accept cash payments for the asset, or a debtor may be able to keep the non-exempt property by filing a Chapter 13 bankruptcy.

by , New Orleans, Louisiana bankruptcy lawyer.

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Census Bureau Releases 2011 Bankruptcy Median Family Income Guidelines

The Census Bureau has released the latest Median Family Income guidelines.  The Median Family Income is used as the first step in determining whether or not a person can file a Chapter 7 Bankruptcy.

If the person’s median family income is below the average income for his state, then he qualifies to be in a Chapter 7 without having to do any further analysis of his financial situation.

In Louisiana where I practice, the Median Family Income amounts are as follows:

One Person:       $38,108.00

Two People:       $46,704.00

Three People     $55,699.00

Four People       $67,239.00

For households with more than four people an additional $7,500.00 dollars is added for each additional person in the family.

The new income amounts go into affect on March 15, 2011.

To see the Median Family Income for other states, click on the link below:

U.S. Trustee’s Program

by , New Orleans, Louisiana bankruptcy lawyer.

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Can I Include The Loan On My Wrecked Car In Bankruptcy?

A collateral mortgage loan on a car can be discharged in a bankruptcy even if the car is wrecked.  This is true of a car with mechanical problems as well.

The reality is that for most people the days of a 3 or 4 year car loan are gone.   In my practice I often see potential bankruptcy clients with car loans of up to 7 years!

With such lengthy car loans, the likelihood of a car being damaged or failing mechanically before the completion of the loan are significant.

In a Chapter 7 bankruptcy you have the right to discharge a secured loan such as a car loan.

Generally speaking the creditor will then make arrangements to pick up and sell the vehicle.  The amount that the creditor gets at the auction of the car is all it can get from a debtor that has “surrendered” a vehicle in a Chapter 7 bankruptcy.

A similar result occurs in a Chapter 13, with the only difference being that if there is still money owed after the auction of the vehicle, that money owed, often referred to as a “deficiency”, is treated as an unsecured debt, and the creditor may receive some or all of the deficiency if payments are made to the unsecured creditors in a Chapter 13 Plan.

The option of whether or not to surrender a vehicle and the type of bankruptcy to file should only be made after consulting with an experienced bankruptcy attorney.

by , New Orleans, Louisiana bankruptcy lawyer.

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