Jacksonville Lawsuits & Judgments Lawyer
Using Bankruptcy to Stop Payment on Judgments
Bankruptcy is an extremely useful legal tool to utilize in getting out from under mountains of debt from many different sources. Many of our debt relief clients are unclear on the scope of debts that are covered by the bankruptcy laws. While credit card debt and medical bills clearly fall into the category of debt either dischargeable in a Chapter 7 bankruptcy or subject to a Chapter 13 repayment plan, what about lawsuit judgments? Is a civil plaintiff a creditor? Moreover, what happens if a typical creditor such as a bank files a collection lawsuit? What if they obtain a judgment? Below, we discuss the effect of bankruptcy on different types of lawsuits and judgments. Reach out to a seasoned Jacksonville lawsuits and judgements lawyer at Albaugh Law Firm to discuss your path to a brighter financial future.
When you file for bankruptcy under either Chapter 7 or Chapter 13, the bankruptcy court will issue an automatic stay, which will put an immediate hold on all collection efforts. Wage garnishment, foreclosure, repossession, and civil lawsuits will all be halted until the stay is lifted. If one of your creditors has started a lawsuit against you, no matter the stage of the lawsuit, the proceedings will be halted for the duration of the stay. If the debt they are seeking to collect is discharged in a Chapter 7 bankruptcy, or if it is folded into a Chapter 13 repayment plan, then any claims they have against you in their debt collection lawsuit have become moot. You will be able to get the case summarily dismissed.
If a creditor has already obtained a judgment against you, the same applies. The automatic stay will stop any wage garnishment or other debt collection efforts they are in the process of undertaking. Obtaining a judgment against you just demonstrates the debt that you owe. If the creditor believes the debt they are seeking is exempt from your bankruptcy proceeding, they can file a motion with the court to lift the automatic stay and proceed with their lawsuit.
That being said, it is extremely helpful to stop a judgment before it happens, if possible, by filing bankruptcy. A civil judgment gives a creditor significantly more leverage against you, at least until their debt is discharged. Even if their debt is not discharged in the bankruptcy, you will get additional time to come up with any defenses. Further, the judgment they obtain may affect whether their debt is dischargeable in bankruptcy, depending on the nature of the allegations in their lawsuit.
Other Civil Judgments
Civil judgments refer to decisions rendered in civil court. The majority of lawsuit judgments against bankruptcy debtors involve unpaid debts, which we have already discussed above–typically, breach of contract claims when you fail to pay your medical bills, credit cards, or other debt.
There are other types of civil judgments that are less common but could still arise. Personal injury lawsuits, slander or libel claims, breach of contract claims, and other civil matters may result in a monetary judgment against you. Typically, these civil judgments will be treated like any other unsecured debt and will be discharged in a Chapter 7 bankruptcy. There are exceptions: A malicious or willful injury will not be discharged, nor will a judgment based on fraud. Personal injury judgments based on a drunk driving accident are also likely exempted from discharge.
Child Support and Alimony
It is important to note that while some civil judgments can be discharged in bankruptcy, family law matters are a special case. Bankruptcy law refers to alimony, maintenance, and support as “domestic support obligations.” If you are behind on child support or alimony payments, you cannot use bankruptcy to eliminate those debts. If your co-parent or former spouse obtains a judgment against you for past-due domestic support obligations, bankruptcy will not help you.
Note that the rule applies only to support obligations, not property settlements or other financial agreements between former spouses. The language in the bankruptcy code, however, is broad enough to give judges leeway to examine divorce property settlements to determine whether they are, in essence, support obligations rather than mere property settlements. If they are support obligations in practice, they will not be discharged.
Dedicated Bankruptcy Attorneys Ready to Help
If you are considering bankruptcy and do not know where to begin, speak with a seasoned and compassionate Jacksonville bankruptcy attorney at the Albaugh Law Firm. We offer free consultations for our bankruptcy clients. We will review your financial situation, evaluate your options for debt relief, and discuss the best step forward for you and your family. We will be there to offer advice and representation throughout your debt relief journey, whether through bankruptcy or other means. Call our Florida bankruptcy attorneys at 904-471-3434 today for a free consultation and case evaluation.