Minnesota residents often hesitate to file bankruptcy when they have existing liens or judgments. Many believe that once they have a judgment against them, it is then too late. Our attorney Andrew Curtis Walker would like to clear up this misconception by providing some valuable information.
Effect on Pending Judgments
Upon filing bankruptcy, anyone who is seeking a judgment against you must stop immediately. In other words, a bankruptcy petition will prevent all pending judgment actions from advancing. Your creditors will also be unable to contact you directly about any of your outstanding debts.
One of the biggest reasons that people file bankruptcy in Minnesota is that filing bankruptcy prevents anyone from getting judgments.
Since the collection lawyers are unable to proceed, this essentially means that a creditor’s hands are tied. Many times, companies will become frustrated by the bankruptcy process and give up, choosing instead to write off the debt as a tax deduction. This does not cause the person who filed bankruptcy to owe taxes.
What Happens with Existing Judgments?
Filing bankruptcy will stop all judgment actions from advancing. A successful bankruptcy will also wipe away any judgments that have already occurred. Anyone who has received a judgment against you will even be prohibited from using it against you in the future.
Bankruptcy prevents creditors from garnishing your wages, levying your bank account, or taking any other collection action. However, the judgment may continue to show up on your credit report, despite the fact that you no longer owe your creditor any money.
Getting Rid of Liens through a Judgment Removal
Voided judgments often appear in your county’s land records as liens against your property. These liens would then need to be cleared before you could sell your property. Some mortgage companies also hesitate to write loans on properties that have liens, in which case selling your home might be more difficult.
A judgment removal is needed to eliminate any liens on your property that were wiped away during bankruptcy. This involves filing paperwork with your county in order to remove the lien from your property records. That way, you will not wind up paying the creditor from the proceeds of any real estate sales.
Judgment removals must be initiated as separate actions aside from the bankruptcy process. It’s important to follow through with them to ensure a clean title for your real property. If you need assistance with a judgment removal, please do not hesitate to contact us.
Are there any judgments where a bankruptcy won’t work?
Yes, there are a few. If the judgment is for a type of debt that survives bankruptcy, then the judgment won’t go away in bankruptcy. The most common examples like this are judgments for student loans, child support, or for fraud. Failure to pay a loan isn’t fraud, however, and in Minnesota, most judgments are for loan collection. Usually it is companies like Midland Funding or Portfolio Recovery Associates who get judgments against people. These are almost never fraud judgments.
If you have a judgment and want to make sure that bankruptcy will work on it, then please bring it to your free consultation with Walker & Walker. We will be happy to look it over for you and make sure it will go away.
Act Promptly to Resolve Judgment Issues
Just because a judgment has already been rendered against you does not mean it is too late to file bankruptcy. However, we recommend filing before a judgment whenever possible. That way, you will not be bothered by collections letters or worry about having a judgment show up later on your credit report.
You also will not have to go through the hassle of having liens removed from your property. Property liens are something many Minnesota residents never think about until it is time to sell their homes. In many cases, this makes the judgment removal process more difficult, especially if a great deal of time has passed.
By acting right away, you can keep past judgments from costing you any more of your hard-earned wages. Contact us today for a free consultation to see if you are a good candidate for bankruptcy.
Help from Reputable Bankruptcy Attorneys in Minneapolis
Are you receiving letters from a creditor for bills you cannot pay? Has there been a judgment against you that you would like to have removed? If so, it’s not necessarily too late for you to act.
Don’t struggle with more debt than you can handle. Here at Walker and Walker, we are an experienced bankruptcy law firm that can help you deal with liens, judgments, and other debt issues. Contact us today to schedule a bankruptcy consultation.