Your bankruptcy discharge will wipe out your obligation to pay back the deficiency judgment. However, if the lender placed a lien on any of your properties using the deficiency judgment, Chapter 7 bankruptcy will not automatically remove that lien (your discharge only eliminates your personal liability for debts).
How do I claim Chapter 7?
To qualify for Chapter 7 bankruptcy you:
- Must pass the means test, which looks at your income, assets and expenses.
- Cannot have completed a Chapter 7 in the past eight years or a Chapter 13 bankruptcy within the past six years.
What debts can be forgiven in Chapter 7 bankruptcy?
What Debts Are Discharged in Chapter 7 Bankruptcy? A Chapter 7 bankruptcy will generally discharge your unsecured debts, such as credit card debt, medical bills and unsecured personal loans. The court will discharge these debts at the end of the process, generally about four to six months after you start.
Can you negotiate a Judgement?
Consumers have choices when dealing with a court judgment. Even after a judgment is entered against you, it is still possible to settle a debt for less than the court-approved amount. However, you may be able to negotiate a discount to the debt, in return for a lump sum payment.
Can a Judgement be settled for less?
A creditor may agree to settle the judgment for less than you owe. This typically happens when the creditor thinks you might file bankruptcy and wipe out the debt that way. Settling can be a win-win. The creditor gets at least partial payment for the debt — although it usually will require it as a lump sum.
What happens to credit card debt in Chapter 7 bankruptcy?
In Chapter 7 bankruptcy, your credit card debt is wiped out entirely without a repayment plan. Credit card debt is generally dischargeable; however, if the credit card company can prove to the court that you used your credit cards fraudulently, the court can order that the debt not be discharged, and you will have to pay it back.
Can a judgment be removed from a Chapter 7 bankruptcy?
Your bankruptcy lawyer may be able to handle this for you, but most lawyers don’t consider that as part of the process of filing for bankruptcy. Filing for Chapter 7 bankruptcy won’t get rid of a judgment that’s already on your record. Depending on your situation, you may not care.
Can you get rid of a judgment lien in bankruptcy?
In some situations, you can get rid of (avoid) judgment liens in Chapter 7 bankruptcy. A judgment lien occurs when a creditor sues you, gets a judgment against you, and files a lien against your personal property to satisfy the judgment. You can avoid judgment liens in a Chapter 7 bankruptcy under the right circumstances.
Can a credit card company sue you if you file bankruptcy?
Filing bankruptcy can help you get rid of credit card debt. However, if you use your credit cards excessively knowing you intend to file bankruptcy, the credit card company can file an adversary proceeding (lawsuit) alleging fraud and asking the court to exclude the debt from your discharge. If successful, you’ll remain obligated to pay the debt.
