Los Angeles Lawsuits & Judgments Lawyers
Bankruptcy is a powerful way for eliminating unsecured debts, like medical bills and credit card debts. Court judgments are also typically unsecured debts. Someone sues you and, if successful, they get a court order that you must pay them a certain amount in damages. In many situations, it is possible to also eliminate judgments in a bankruptcy, but you should contact Wadhwani & Shanfeld to speak with our Los Angeles lawsuits & judgments lawyer about the specifics of your case. The bankruptcy code is complicated, and only some judgments will qualify.
When Can You Discharge Judgments?
Chapter 7 bankruptcy is the most efficient way for eliminating debts. In a matter of months, you can be free of nonpriority, unsecured debt like personal loans, payday loans, and medical bills.
You can also discharge some court judgments—but it’s complicated. The Bankruptcy Code identifies some judgments as “non-dischargeable,” so you are out of luck if those are judgments you want to discharge.
The simplest way to identify dischargeable judgments is to ask if the underlying debt is dischargeable. So a judgment for failure to pay credit cards, medical bills, or personal loans should all be dischargeable, so you can usually wipe them out. There’s a catch, which we’ll discuss below. But as a general rule: if you could eliminate the debt in bankruptcy, then you can eliminate a judgment based on that debt.
The Bankruptcy Code makes some debts non-dischargeable, so you can’t eliminate a judgment for one of these debts:
- Unpaid alimony or child support
- Student loan debt
- Some tax debt
- Debt resulting from embezzlement
- Debt arising from injuries you caused by driving drunk
If a motorist sued you for a drunk driving accident, you can’t discharge that court judgment against you. That’s a type of debt which the bankruptcy code says isn’t eligible for discharge, so it survives the bankruptcy.
The Exception: Judgment Liens
Even dischargeable debts might be ineligible for elimination if the judgment creditor has a judgment lien on your property. California law allows someone with a court judgment to attach a lien to real estate or personal property. That helps guarantee payment. So if your neighbor sues you for a $3,000 loan and wins in court, she can file paperwork to attach a lien for $3,000 on your car or other property.
This lien typically survives any bankruptcy because it is no longer a nonpriority, unsecured debt. It’s now a secured debt. And the lien gives the lienholder a right to payment if you sell the property or the right to force a sale and collect what you owe them.
You should discuss any judgment liens with your attorney. You want to deal with them as part of the bankruptcy, otherwise they can upend a carefully laid plan to get a fresh start. It’s possible to avoid certain liens, depending on the facts.
A Team in Your Corner
Wadhwani & Shanfeld has helped Los Angeles debtors for years. Call our firm to speak with our Los Angeles lawsuits and judgments lawyer.