If you are sued and a creditor gets a judgment against you, you may be able to discharge your personal liability for that judgment in a Chapter 7 bankruptcy, and your credit report should list the judgment as included in bankruptcy or discharged in bankruptcy.
This will depend on whether the underlying debt on that judgment is dischargeable in bankruptcy or nondischargeable.
Certain debts are usually not automatically nondischargeable, such as student loans, child support or spousal support obligations, debts owed to government entities (fines, taxes, court costs, restitution in criminal cases, etc., post-petition HOA and condo fees, and, death or injury caused by driving under the influence, or DUI.
Other types of judgment debts may not be dischargeable if the creditor objects to a discharge, including, injury caused by a willful or malicious act, such as assault, fraud used to obtain money, goods or services, or fraud committed while in a position of trust, such as embezzlement while acting as a trustee or guardian.
Even if you are able to discharge your personal liability on the judgment, there may be a lien that survives the bankruptcy. Under certain circumstances, you may be able to avoid a judgment lien in the bankruptcy, depending on available bankruptcy exemptions. You should speak to a knowledgeable bankruptcy attorney about whether you can avoid a judgment lien in bankruptcy.
If a creditor sues you and gets a judgment for debts, including a judgment for credit card debt, medical bills, lease or rental agreements, and the debt is later discharged in bankruptcy, you should check your credit report to ensure that the judgment is updated after the bankruptcy.
Judgments can remain on your credit report for up to 7 years from the filing date. Your credit report should accurately report public record information, including judgments.
After filing bankruptcy, a judgment on a discharged debt should be reported as included in bankruptcy or discharged in bankruptcy. You should check your credit report to ensure that the credit bureaus do not incorrectly report the status of the judgment, or report a current balance for discharged debt.
If you believe your credit report contains errors, or incorrectly reports debts or judgments that were discharged in bankruptcy, contact one of our attorneys today at (313) 415-5559 for a free consultation.