Bankruptcy & Judgments
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Bankruptcy & Judgments
Has a creditor obtained a judgment against you? You may be feeling overwhelmed or hopeless, but you do have options. A judgment against you can make your financial situation even more precarious and make it difficult to support yourself and your family, especially when a creditor has been awarded a wage garnishment or bank account levy against you.
Bankruptcy was designed to give consumers a fresh financial start. Filing for bankruptcy can give you immediate relief from a judgment and help you get a new start by potentially wiping out the judgment and debt through a bankruptcy discharge.
Nondischargeable vs Dischargeable Judgments
What happens to the judgment in bankruptcy depends on whether the underlying debt is dischargeable and the type of bankruptcy you chose. There are some debts that are usually non-dischargeable:
- Death or injury judgment due to DUI
- Debt owed to a government entity, such as court costs, taxes, fines, and restitution in a criminal case
- Child support and spousal support
- Student loans (Not always! Student loans can be successfully discharged in some cases)
If the basis for your judgment is not under one of these categories, it may be a type of debt that can be excepted from discharge if your creditor files an objection with the court. In this case, the creditor must ask the court to decide if a debt is nondischargeable and it may depend on whether repaying the debt would be an undue burden on you after bankruptcy. If the creditor files an objection to your bankruptcy discharge and shows the underlying debt falls under one of these categories, you may not be able to have it discharged:
- Fraud committed while you were in a position of trust
- Fraud used to obtain services, goods, or money
- Injury caused by a malicious or willful act
- If your judgment does not fall under these categories, it can likely be discharged under Chapter 7 bankruptcy. Once your bankruptcy is discharged, you will no longer owe the debt and the judgment will be wiped away. In Chapter 13 bankruptcy, you may need to pay some of the debt under your 3-5 year repayment plan, after which point the judgment will be discharged.
Lien Avoidance in Nevada Bankruptcy
Getting a discharge may not be helpful if a creditor has obtained a lien on an asset like your home. It is possible to remove the judgment lien through bankruptcy, however, through a process called lien avoidance. In this case, as long as you do not give the creditor a consent judgment (or agree to pay the debt), it’s possible to remove the lien from any asset that you could exempt in your bankruptcy.
To qualify for lien avoidance in your case, you must prove:
- The lien is the result of a money judgment against you and you did not consent to it as part of a settlement,
- You have equity in the asset that you want to claim an exemption toward in your case, and
- The judgment lien is taking up some or all of your equity.
Contact a Las Vegas Bankruptcy Judgment Attorney
If a creditor has a judgment against you, it’s a good idea to work with an experienced bankruptcy lawyer in Las Vegas who can help you understand your options. Filing for bankruptcy can get the judgment discharged in most cases and it may even be possible to remove a lien a creditor has against an asset. Contact Vegas BK today for a free consultation with a bankruptcy attorney to learn more about protecting your assets and getting debt relief through bankruptcy.