When a person has a judgment entered against them, they often are not clear on what it means and what it could mean. At The Law Offices of Paul Y. Lee, we have people ask us frequently if filing for bankruptcy can get rid of their lawsuit. Keep reading to get the facts and then contact us at 888-748-0025 to request a free consultation from a bankruptcy attorney.
Creditors Can Use Numerous Methods to Collect Their Debt
When a judgment is filed against you, the creditor then has the legal right to garnish your wages, levy any bank accounts you have, and even install a receiver if you run a business. The creditor can also make it so that you are required to go to court to testify about your assets and where they are kept.
Judgments Grow After They Are Entered
It is important to know that the amount of the entered judgment is unlikely to be the amount you will have to pay. You will also be likely to be required to pay costs, fees, and even the costs of the creditor to collect on their judgment. It can also accrue interest. In California, the interest rate on judgments is a staggering 10%.
Judgments Are Dischargeable in Bankruptcy
If you have debts that have been reduced to judgments, they can be wiped out when you file for bankruptcy, just like the debts that lie behind them. When the bankruptcy process determines if a particular debt is dischargeable, it involves looking at the nature of the debt – not the judgment or procedural status of the debt.
Your Judgment Will Eventually Die of Old Age
State law puts limits on how long judgments can last. In California, a judgment only lasts for ten years. However, it can then be renewed. That said, it will eventually become unenforceable and essentially “die of old age.” Waiting out a judgment might or might not be a good idea for you. For example, if it has just been filed, then you can assume you will soon see your wages garnished or other collection attempts.
On the other hand, if it is nine years old, you might want to wait for the decade to be up. If they do not refile it, then you can move on. If they do, then you can consider your other options at that point.
Call Us to Find Out if Bankruptcy is a Reasonable Option
Bankruptcy is certainly not the answer to all judgment problems, but it might be the right answer for you. It depends on your other debts, your income, and the amount of the judgment. You can contact The Law Offices of Paul Y. Lee at 888-748-0025 for a free bankruptcy consultation to find out what your best options are.