Not knowing how else you can manage and pay off your crippling debts, you may feel as though you have nowhere else to turn besides a bankruptcy filing. However, you may be hesitant with whether putting yourself through this arguably grueling process is worth it if your creditors have already initiated lawsuit judgments. Or, if this process can block any future ones from coming your way. With all these things considered, please follow along to find out whether bankruptcy can eliminate any lawsuit judgments made against you and how a proficient Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can ensure that you are granted the proper protections at this time.
What should I know about dischargeable and non-dischargeable debts in bankruptcy?
Before getting into lawsuit judgments, you must comprehend the basics of dischargeable and non-dischargeable debts in your bankruptcy case. Firstly, dischargeable debts are those that will be eliminated, or “discharged,” from your legal and financial responsibility at your case’s close. Common examples of these debts are credit card debts, medical bills, certain tax debts, utility bills, etc.
Secondly, as you may likely put together yourself, non-dischargeable debts are those that remain with you post-bankruptcy. This may consist of your student loan debts, spousal and child support payments, debts incurred through fraud, and more.
Can my bankruptcy case eliminate lawsuit judgments made against me?
Now, having that understanding, you should know that your bankruptcy case may eliminate lawsuit judgments stemming from your dischargeable debts but not your non-dischargeable debts. This is thanks to your bankruptcy’s automatic stay, in which the court may inhibit your outstanding creditors from taking continued collection actions against you, including enforcing lawsuit judgments.
Importantly, though, the only exception may be if your dischargeable debt is associated with an asset or property used as collateral. This is because your bankruptcy may not prevent your outstanding creditors from placing liens on your assets or properties used as collateral. In turn, these liens may stay in place even after your case closes. And so, your creditors may still have opportunities to recover them.
The most popular assets and properties that serve as collateral are houses and vehicles. Therefore, to keep your house, car, or other collateral, you may have to undergo an entirely separate process of filing a lien avoidance action with the court. Here, you must demonstrate to the court that you still have equity in the assets or properties affected by the judgment lien. In other words, you qualify for the state’s bankruptcy exemptions.
To ensure you do not go through this critical yet complex process alone, please reach out to a talented Rockland County bankruptcy attorney. Our team at The Law Offices of Allen A. Kolber, Esq., P.C., is more than happy to serve you.
