If you are sued, and the party who sued you proves to the court that:
Then that party will get a judgement against you. The judgment is basically an order, signed by a judge, that says you owe the party a certain amount of money.
Interest may be charged on this debt.
The party can use that judgment to garnish your wages, levy your bank accounts, and put a lien on certain property that you own.
When you file for bankruptcy protection, the vast majority of judgments against you are discharged in the bankruptcy. That means that you are no longer legally responsible for those debts.
There are certain judgments that are not discharged in bankruptcy, see our article What Judgments are Not Discharged in Bankruptcy?
Linda Thompson is happy to help you take care of judgment matters. Feel free to give her a call at 651-464-8510.
Certain judgments are not dischargeable in a bankruptcy action.
Judgments based on claims of fraud are probably the most common. If you think the party who sued you convinced the court that you committed fraud, you may need to get a copy of the documents (the Summons and the Complaint) that were filed in state court and read them to see if the party argued a fraud claim. If you do not understand the claims made in the Summons and the Complaint, feel free to call Linda Thompson at 651-464-8510 to discuss.
Judgments based on work performed on your personal homestead property are another common type of non-dischargeable debt. If the judgment was for improvements msade to your house, you most likely cannot get rid of those in bankruptcy because they will most likely remain as a lien against you property and will need to get paid if you sell or refinance your property in the future. There are exceptions to this, however, and you should contact our office to discuss how these judgments work. Call 651-464-8510 and ask for Linda Thompson.
Any judgments based on unpaid alimony, spousal maintenance or child support are generally not dischargeable.
Some other debts, like some taxes and some criminal matters, may not be dischargeable. Feel free to call Linda Thompson at 651-464-8510 to discuss your particular debt.
The day you file for bankruptcy protection you are essentially drawing a line in the sand. You are telling the court that you are including all of your debt as of the day you filed your bankruptcy. If the judgment that is now causing you problems was from a debt that you incurred after you filed your bankruptcy, then that debt was after you drew that line in the sand. That debt is not discharged in bankruptcy.
If that judgment is making it difficult for you to now complete your closing / re-finance, you still have some options. Give our office a call at 651-464-8510 to discuss, ask for Linda Thompson or Nicole Anderson.
Bankruptcies are filed in the federal court system. That is where the law requires them to be filed.
Judgments are filed in the state court system. That is where it makes the most sense to file the vast majority of judgments.
Unfortunately, these two systems do not talk to each other all that often. Because of this, you must take on the job of letting the state court know when the federal court has wiped out a judgment.
There is Minnesota state law that sets forth the requirements for having your judgment changed from “Active” to “Bankruptcy,” and we can do that for you. Call Linda Thompson at 651-464-8510.
Your lender or other professional who is demanding you have your judgment marked “Bankruptcy” may have a variety of reasons for requiring this action. The most common seems to be the lender wants to be very sure that you do not owe the debt, and that the judgment creditor will not demand to be paid at closing.
So… you know that you don’t need to pay this debt, and the bankruptcy court knows that you don’t need to pay this debt, and your bankruptcy attorney knows that you don’t need to pay this debt… but the State of Minnesota’s records do not reflect this. (To understand why the State’s records are different from the bankruptcy court’s records, see Why is the Judgment Still Shown as “Active” Even Though I filed Bankruptcy?)
Because your lender is most likely relying heavily on what the State records say, the lender may hit the brakes on your sale/re-finance until the State records show your judgment changed from “Active” to “Bankruptcy.”
You may think that simply showing your lender a copy of your bankruptcy documents will be enough to convince the lender that you no longer owe this debt. Usually, that is not the case.
You may also think that simply having your bankruptcy attorney call your lender will be enough to convince the lender that you no longer owe this debt. Again, usually that is not the case.
To start the process that will satisfy your lender’s requirements, please call Linda Thompson at 651-464-8510.
Your lender may be telling you that you need to have the judgment marked “Satisfied.” That is a common misunderstanding of how judgments work.
“Satisfied” and “Bankruptcy” mean two very different things. They are actually the opposite of each other. “Satisfied” means that you paid the debt. “Bankruptcy” means that you are no longer legally obligated to pay the debt. So for “Satisfied” you actually paid money, and in “Bankruptcy” you paid nothing or nearly nothing.
Having the judgment marked “Bankruptcy” is enough to satisfy the vast majority of lenders.
Your lender may say you need to have the judgment marked “Discharged.” That is not an actual legal option in Minnesota. “Bankruptcy” essentially means the same thing as “Discharged.”
Your lender may say you need to have the judgment marked “Inactive.” Again, as the person who owes the money that is not an option you can legally pursue in Minnesota.
Call Linda Thompson at 651-464-8510 to discuss your options.
You may be frustrated to see this judgment pop up out of the blue because you thought it was all taken care of in your bankruptcy. And you are right – the vast majority of judgments are essentially “taken care of” in your bankruptcy. You are no longer legally obligated to pay most judgments once your bankruptcy case is successfully discharged. (For more information about certain judgments that are not discharged in bankruptcy, see our article What Judgments are Not Discharged in Bankruptcy?) (make this a link)
Most folks go through the rest of their lives without any issue regarding these discharged debts. And that is why they are not included as a part of the cost of filing your bankruptcy. It just isn’t necessary for most people to take this extra step.
If your lender is requiring you take this step, feel free to call Linda Thompson at 651-464-8510 to get the process started.
Once you know for certain your lender will require you to have the judgment marked “Bankruptcy,” contact our law firm at 651-464-810 and ask for Linda Thompson. Linda Thompson is an attorney at Anderson & Associates, specializing in bankruptcy litigation, chapter 7 and chapter 13 bankruptcy filing, and post-bankruptcy needs such as judgment matters, creditor negotiation, and credit repair.
You are most likely researching this issue because you are facing a pressing deadline. Most folks contact our office afraid they will miss their closing date.
If your lender tells you in advance that judgments marked “Active” will pose problems for your closing, you should call our office right away to get the process started.
If your lender only gives you a few days’ notice, you should still contact our office right away.
It takes 30-40 days to have the judgment changed from “Active” to “Bankruptcy.” Most of the time is consumed by the mandatory 20 day waiting period after the judgment creditor is served. Minnesota state law requires you wait those 20 days in case the judgment creditor objects to your filing. It is very, very rare for the judgment creditor to actually respond to these things.
Assuming the judgment creditor does not respond, we then mail everything to the state court and it is filed. It may take a few days for the judgment status to change from “Active” to “Bankruptcy.”
If the judgment creditor does respond, then you are looking a whole other set of issues to address. The judgment creditor who are more likely to respond are relatives, neighbors, former business partners, ex-spouses, ex-boyfriends, ex-girlfriends, and small-town business.
We are happy to discuss more of this with you, please call Linda Thompson at 651-464-8510.
If you are facing a tight turnaround for a judgment matter, you still have some options.
If you hire our office to represent you in the matter, Linda Thompson – our attorney who specializes in these matters – will personally contact your title company, closing company and whomever else needs to be notified, to explain why the judgment is still marked “Active,” and how our office will work to have the judgment marked “Bankruptcy.” If necessary, Linda will also draft a letter to the companies. This is usually enough to allow your closing to proceed.
It is rare that the lender will simply drop this requirement. Linda Thompson – our attorney who specializes in these matters – has been able to convince a couple of lenders over the past several years, but the vast majority of lenders still require you have the judgment marked “Bankruptcy.”
As you have probably already figured out, the information on our website is aimed toward persons who have already filed bankruptcy and are now dealing with judgments that still show as “Active” on the state court website. If you have not filed for bankruptcy protection, you still have some options.
One option is the try to settle the debt by negotiating with the judgment creditor for pennies on the dollar. Our office is happy to discuss your options – please call Linda Thompson or Nicole Anderson at 651-464-8510.
We can provide answers in a free initial consultation. You can meet with a lawyer about your case in our Forest Lake office, or over the phone. Call (651) 464-8510 or click here to contact us via email.
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The Forest Lake, Minnesota bankruptcy lawyers of Anderson & Associates, L.L.C., represent people from our local area (Hugo, Lindstrom, Chisago City, Wyoming, Lino Lakes, Centerville, Shoreview) as well as Minnesota communities throughout the Twin Cities and greater Minnesota.