Many creditors have a systematic approach to collecting money from customers who can’t pay them back. In my Asheville bankruptcy law practice, it is common for potential clients to schedule an initial consultation with me immediately after receiving a summons for a collection lawsuit from the sheriff. Others have had a default judgment hurting their credit score for quite sometime, and have (finally) made the decision to get their finances cleaned up.
Many Judgments Can Be Cleared Up In Bankruptcy
For credit cards, medical debts, mortgage deficiencies, and most unsecured personal loans, a lawsuit or judgment can be extinguished with a bankruptcy filing. If the judgment has attached to real property owned by the consumer, a motion to “avoid” that judgment may be necessary to resolve the problem completely. So long as the debtor’s interest in the real property is ‘exempt,’ avoiding the judgment lien through Bankruptcy Code Section 522(f) is likely the appropriate measure to take.
IRS, Judgments for Fraud, and Domestic Support Obligations
Tax liens on real estate can’t be removed in bankruptcy, although many times the tax obligation itself can be discharged. Debts for fraudulent behavior or drunk driving generally cannot be removed either. Lastly, the Bankruptcy Court was not designed to deal with child support and alimony payments, so those types of debts are generally non-dischargeable as well (property settlements in Chapter 13 are the primary exception).
Address the Issue Head-On
A judgment can be a sign of broader financial trouble. If you owe a creditor, it makes financial sense to understand your options moving forward so you can make an informed decision. If you live in Western North Carolina, I would be pleased to speak with you during a free, initial bankruptcy consultation.