Effect on Pending Judgments
Upon filing bankruptcy, anyone who is seeking a judgment against you must stop immediately due to the “Automatic Stay” imposed on all collection activity. In other words, a bankruptcy petition will prevent all pending judgment actions from advancing. Your creditors will also be unable to contact you directly about any of your outstanding debts.
One of the biggest reasons that people file bankruptcy in Sacramento, California is that filing bankruptcy prevents anyone from getting judgments.
Since the collection lawyers are unable to proceed, this essentially means that a creditor’s hands are tied. Many times, companies will become frustrated by the bankruptcy process and give up, choosing instead to write off the debt as a tax deduction. Normally, forgiveness of a debt causes a taxable event, but when you are in bankruptcy, forgiveness of a debt is not taxable as you are presumed to be insolvent.
What Happens with Existing Judgments?
Filing bankruptcy will stop all judgment actions from advancing. A successful bankruptcy will also wipe away any judgments that have already occurred. Anyone who has received a judgment against you will even be prohibited from using it against you in the future. If the creditor filed a lien against your real property, that lien might survive the bankruptcy if not specifically avoided with a court order.
Bankruptcy prevents creditors from garnishing your wages, levying your bank account, or taking any other collection action.
Getting Rid of Liens through a Judgment Removal
Voided judgments often appear in your county’s land records as liens against your property. These liens would then need to be cleared before you could sell or refinance your property.
A judgment removal is needed to eliminate any liens on your property that were wiped away during bankruptcy. This involves filing paperwork with your county in order to remove the lien from your property records. That way, you will not wind up paying the creditor from the proceeds of any real estate sales.
Judgment removals must be initiated as separate actions aside from the bankruptcy process. It’s important to follow through with them to ensure a clean title for your real property.
Act Promptly to Resolve Judgment Issues
Just because a judgment has already been rendered against you does not mean it is too late to file bankruptcy. However, I recommend filing before a judgment whenever possible.
You also will not have to go through the hassle of having liens removed from your property. Property liens are something many California residents never think about until it is time to sell or refinance their homes. In many cases, this makes the judgment removal process more difficult, especially if a great deal of time has passed.
By acting right away, you can keep past judgments from costing you any more of your hard-earned wages. Contact me today for a consultation to see if you are a good candidate for bankruptcy.
Help from Reputable Bankruptcy Attorney in Sacramento, California
Are you receiving letters from a creditor for bills you cannot pay? Has there been a judgment against you that you would like to have removed? If so, it’s not too late for you to act.
Don’t struggle with more debt than you can handle. I am an experienced bankruptcy law attorney that can help you deal with liens, judgments, and other debt issues. Contact me today to schedule a bankruptcy consultation.
