Income tax liability: You can wipe out some income tax liability, but there is a very specific and extensive test required to do so. I have written on this subject in a previous article. Ask the Author: Justin Harelik. Mar 30, · When you file for Chapter 7 bankruptcy, you are looking to wipe out your personal liability for repayment of certain debts. If a creditor sued you and got a judgment before the bankruptcy case is filed, then you may be able to wipe out that liability. But the judgment is a separate matter. It is a record of an official result of a lawsuit in court. Filing for Bankruptcy After Receiving a Nondischargeable Judgment. If you have other debt or need time to pay the judgment, filing for bankruptcy might provide relief. The chapter you choose will depend on your particular needs. Chapter 7 bankruptcy. Filing for Chapter 7 bankruptcy can help by wiping out other qualifying debt. Although you’ll.
Related videosHow a bankruptcy affects collection of a judgment
Whether the facts and circumstances of your situation warrant such an action or whether the motion would be approved is up to you and your lawyer. The judgment will remain as a hollow shell, on file with the civil court and on your credit report until some action is taken. Under New York law not bankruptcy law you can file a motion with the civil court to mark the default judgment as discharged, but only after a year has passed since your bankruptcy has been discharged.
Depending on your situation, you may not care. When you file for Chapter 7 bankruptcy , you are looking to wipe out your personal liability for repayment of certain debts.
If a creditor sued you and got a judgment before the bankruptcy case is filed, then you may be able to wipe out that liability. But the judgment is a separate matter. Even if you wipe out your liability for the debt, the record of your judgment remains in place. Assuming the underlying debt is wiped out in your Chapter 7 bankruptcy case, the judgment remains nothing more than an empty shell. The creditor cannot freeze your bank account, seize your wages, or take any further action against you.
Under California law, a judgment becomes a lien on land, a house or other building you own only if the judgment creditor files a n Abstract of Judgment. In other states such as New York, however, the judgment is automatically a lien against property.
A judgment does not last forever. In both states, however, the creditor can apply for an extension of the judgment to get 10 more years to collect the debt. Learn more about that here. This means you made an agreement with the lender to pay for the item in exchange for the current use of the item. Failure to pay results in a forfeiture of your right to continue using the item. Exception: You are allowed to surrender the vehicle, jewelry or merchandise back to the lender and eliminate your obligation to pay.
You are not obligated to keep an item just because the lender has a security interest. Child support and alimony: Fortunately, you may not eliminate a legal obligation to pay child support or alimony.
Any outstanding balance owed at the time of filing will still remain after the case is over. Ex-spouse legal fees and credit card debt: In many divorce decrees, 1 spouse agrees to pay for legal fees or some outstanding debts owed by the other spouse. These debts will survive your bankruptcy.
For example, if you agree to pay the credit card balances in your name and the name of your ex-spouse, you could not then turn around and file bankruptcy to wipe out those debts or the agreement to pay. Your ex-spouse could still force you to pay those bills. Rebuilding your credit can be a long process when going in blind.
Check your credit report and credit score for free at myBankrate. Restitution: Court-ordered restitution is not dischargeable in bankruptcy. Restitution is a court-ordered sum of money you must pay for causing financial loss or personal injury to another. Income tax liability: You can wipe out some income tax liability, but there is a very specific and extensive test required to do so. Read more Bankruptcy Adviser columns and more stories about debt management.
The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. How We Make Money. Justin Harelik The Bankruptcy Adviser. Key Principles We value your trust. Share this page. Secured debts. Child support and alimony.
Ex-spouse legal fees and credit card debt. Car accident due to intoxication or willful and malicious intent. Income tax liability. Related Links: Credit card balance transfer: A good idea? Escape route for student loan co-signer? Is there a way out from car title loans? Related Articles: Millennials: Why upbeat? It depends Bankruptcy doesn't make debt disappear Can bankruptcy eliminate tax bills? Create a news alert for "debt".
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