Judgment removal is the process of removing a judgment from the county land records where you have your house.
Bankruptcy, at least in Minnesota, does not do it automatically.
Read on to understand what a judgment is, whether you have one, and whether you should go through the judgment removal process.
HOW DO I KNOW THERE IS A JUDGMENT AGAINST ME?
After a creditor sues you in court, they get a judgment.
- You will know if a creditor has sued you because they will send you some legal documents called a summons and complaint
A summons and complaint is a letter which says things like “you are being sued, you have 20 days to respond….”
- In Minnesota, you are supposed to be served with this letter and sign for it, but this does not always happen
- The summons can be effective against you even if you do not sign for it
I have heard many stories where the creditor:
- Had a teenager sign for the summons and complaint, or
- Docketed the judgment, but the debtor never even saw the summons and complaint
For more information on judgments in Minnesota, visit the Law Help MN Debt Collection and Garnishment website set up by the Minnesota State Bar Association, and other local nonprofits.
WHAT IS A JUDGMENT? WHAT CAN CREDITORS DO WITH IT?
A judgment is a state court record that allows the creditor to use legal actions to collect money from you to satisfy the judgment.
The collection actions available to creditors with judgments include:
- Wage garnishments
- Bank levies
- And more
Judgments also become a lien against any land that the debtor owns in the county where the judgment is docketed.
- Essentially, if a creditor has a valid lien, then that creditor’s debt must be repaid whenever the property with the lien is sold
How does bankruptcy help?
Bankruptcy voids any judgments based on debts incurred before the bankruptcy filing, making them uncollectable, and unenforceable against property.
- After you have filed for Chapter 7 bankruptcy or Chapter 13 bankruptcy, a judgment can no longer be used to collect money from you
- Judgments do, however, stay in the county land records in Minnesota and can also stay on your credit report
This is usually unimportant because the judgment is voided by the bankruptcy and the creditor can no longer use it to collect money.
HOW DOES JUDGMENT REMOVAL PLAY INTO IT?
Sometimes when buying or selling real estate, the title company will insist that you remove a discharged judgment before closing.
Title companies insist on this because the laws are different from state to state.
- Minnesota has very strong legal protections for peoples’ homesteads, so judgments are not effective against a homestead after bankruptcy
The legal community in Minnesota understands this, but nationwide title companies do not.
In other states, there is a motion that you must file in bankruptcy to remove a judgment against your house, so title companies are often confused when that motion isn’t filed in a Minnesota bankruptcy.
To make title companies comfortable, you can remove the judgment from the county land records by doing something called a judgment removal.
This service is generally not part of the bankruptcy, and is an additional cost. The cost usually depends on the filing fee that your county charges.
When should you worry about judgment removal?
You should only worry about judgment removal if:
- Someone got a judgment against you before you filed for bankruptcy, and
- You want to sell your house
Otherwise it doesn’t matter.
If you want help removing judgments then please Contact Us at 612.724.4357 now and tell us how we can help you.
We will need a copy of your title commitment letter.
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