Does a Bankruptcy Clear Judgments?

If you have one or more court judgments against you, bankruptcy can offer some protection against your judgment creditor or creditors. While bankruptcy cannot remove a judgment from public records or your credit report, it can, in some cases, discharge the debt and restrain your creditor's collection efforts.

Bankruptcy

Bankruptcy is a court proceeding that protects you against your creditors. Depending on your circumstances, the court may either discharge your debt outright or supervise a three- or five-year repayment plan and then discharge any remaining balance.

Judgments

If you are sued by someone and he wins his case against you, the court will grant him a judgment. This gives him the right to collect a specific amount of money from you via any legal means, including wage garnishment, levying your bank account, seizing your assets, and getting liens on your property.

Automatic Stay

When you file for bankruptcy, the court orders your creditors to stop collection efforts. This order is known as an "automatic stay"and stops your judgment creditor from contacting you about your debt or garnishing your wages. Federal law forbids employers from firing you because of one wage garnishment order, but if you have more than one judgment against you and must contend with multiple garnishments, you risk losing your job. In this situation, bankruptcy may be your best hope for preserving your employment.

Non-Dischargeable Debt

Bankruptcy courts cannot discharge all judgments. For example, if your judgment is for back child support, alimony, many tax debts, student loans, or for damages caused while driving under the influence of drugs or alcohol, it cannot be discharged in a bankruptcy.

Credit Reporting

Judgments remain on your credit report for at least seven years after ordered by the court; i unpaid, they can stay on your report until the statute of limitation on judgment debt expires in your state. While bankruptcy can discharge a judgment, it cannot remove it from your credit report. In addition, your Chapter 7 bankruptcy remains on your credit report for 10 years after you file, Chapter 13 bankruptcy is deleted after seven years.