Can a Judgment Be Renewed After Bankruptcy?

A successful bankruptcy resolves all debt matters, including judgments. A judgment is a court order requiring a person to pay a specific amount of money for a debt. However, filing for bankruptcy places control of the debt under the federal bankruptcy court. Debtors in bankruptcy will not owe the judgment after the official discharge, or completion of the bankruptcy. That means it is not possible for the creditor or debt collector to renew the debt after bankruptcy.

Considerations

Decisions by a bankruptcy court are final. Chapter 7 bankruptcy, the fastest of all bankruptcy types, eliminates judgments in just several months. Judgments are common in debt lawsuits for unsecured debts such as credit cards. A person qualifying for Chapter 7 could list $50,000 in court judgments and eliminate all of them though the bankruptcy. In that situation there is no recourse for creditors holding judgments against the degtor. Federal law prohibits the creditor or debt collector from attempting to collect the judgment amount after the bankruptcy. Chapter 13, another form of bankruptcy, offers similar protection but requires a payment plan of three to five years. During Chapter 13 debt collectors usually receive at least some money from debtors.

Exceptions

Debt collectors can continue debt collection efforts against debtors who fail to complete bankruptcy. A dismissal of a bankruptcy completely removes protection by the federal bankruptcy courts. This allows the debt collector to act as if the bankruptcy never happened. A renewal of the judgment is not necessary in this case. After dismissal of the bankruptcy the debt collector can ask a civil court for permission to garnish the debtors bank account or wages. Dismissals in bankruptcy are possible because of procedural errors in the case or a debtors failure to follow court orders. Some people in Chapter 13 bankruptcy cause a dismissal of their bankruptcy by failing to make timely payments to the bankruptcy court to satisfy creditors.

Credit Reports

Debtors completing bankruptcy should confirm that their credit reports list accurate information about the bankruptcy. Debts eliminated by the bankruptcy, including judgments, should appear on credit reports as included in bankruptcy, according to MSN Money. Debtors whose credit reports are showing wrong information should send a letter to the credit bureau asking for corrections. With the successful completion of a bankruptcy and accurate credit reports, debtors can completely ignore old debts.

Alternatives

Debtors with judgments have options other than bankruptcy. Bankruptcy requires debtors to list all debts, and not only judgments. A debtor with just a few judgments could resolve the issues without bankruptcy by negotiating payment plans with debt collectors, for example. The Federal Trade Commission advises that debtors should consider bankruptcy as only a last resort.