Vacating Judgment after BK

[BKParalegal]

I posted a response in another thread regarding this matter., but vacating a judgment is basically asking the court to undue the judgment that has been entered. This attempt can be done regardless if you have filed BK, but since you have filed, then you can file a motion to avoid judgment lien under 522f but that has to be filed in BK court, when it is approved an order is sent and signed by the BK judge which you then take and record it in the county where the judgment was filed. A judgment when recorded attaches to any recorded asset that you have in that county, so yes it attaches to your house.

A judgment has to be recorded every 10 years otherwise it falls off on it's own. It is a long time to wait but just know that it will go away eventually.

Good luck

Good luck

[MSbklawyer]

Now, does a BK-discharged judgment still have "prospective application"?

There's no such thing as a BK-discharged judgment. BK doesn't discharge judgments. It discharges YOU from any PERSONAL liability for that judgment. But the judgment remains. That's why the concept of avoiding the lien of judgment is important.

But if, as you say, the judgment was never recorded and therefore never attached to any property (i.e. never became a lien) then there's really no need for you to do anything with the judgment. It has no effect on you (by virtue of the discharge) and no effect on your property (by virtue of the fact that it was never recorded and therefor never became a lien on your property).

[MSbklawyer]

MSkblawyer: My situation is that I am trying to do a short sale on my house and the title company informed me that there is a judgment in the amount of $10,500 on my name that has to be cleared before I can sell the house.

I did a search on the County Recorder's website and it shows as "JUDGMENT" whereas I've seen it say "LIEN" under other people's names.

The judgment itself does not say anything about a lien or about the property. I called the creditor's attorney that originally got the judgment and they said that the judgment debt was eliminated in the BK discharge but in order for them to file the paperwork to release the judgment with the County Recorder, they would need a $10,500 "processing fee".

So it doesn't sound like they have a lien on the actual property but a judgement whose balance is actually $0 but they are not willing to file the paperwork to show that.

Can you please advise? Thank you.

That's another instance of people using the terms "judgment" and "lien" interchangeably. See, the discharge got rid of YOUR liability for the debt. But the property's liability for the debt is not affected by the discharge.

[MSbklawyer]

So in legal terms, what is a "discharged judgment" as described in the legal paragraph I mentioned before? Since it obviously isn't a judgment discharged through BK, what is it then?

And the term "vacate" a judgment after BK is even used by the "super-experienced" users - so I'm really confused.

A discharged judgment means a judgment that has been paid out.

[BKParalegal]

If MSBklawyer is correct in that they never recorded the judgment then all you really need to do is dispute the entry with the credit reporting agency. The original creditor has 30 days to respond otherwise it is removed

[IBroke]

But if, as you say, the judgment was never recorded and therefore never attached to any property (i.e. never became a lien) then there's really no need for you to do anything with the judgment. It has no effect on you (by virtue of the discharge) and no effect on your property (by virtue of the fact that it was never recorded and therefor never became a lien on your property).

But it has an effect on my credit. That's the whole idea of having it vacated. I already disputed it but only one bureau removed it - so that doesn't do the trick. It was recorded but it never became a lien because I didn't own a home (or any other recorded asset) at that time. So again, I don't see the purpose of filing a motion to avoid a lien judgment. There is no lien based on this judgement, never was and never will be.

You are right, my personal liability has been discharged - that's why I believe that it "is no longer equitable that the judgment or decree should have prospective application."

I highly doubt the Plaintiff of the initial judgment is willing to invest any additional resources in fighting the motion I filed today. Their judgment is a worthless piece of paper now.

What I still would like to know is if I also have to request a hearing. Again, I was under the impression that such a hearing - if considered necessary by the court - would be requested by the judge.

[df04527]

I'm with Ibroke -- it IS very devasting to credit reports and the bureaus will NOT remove it regardless. I have seen it drop from one bureau but never all three from just disputing it. It absolutley is a problem and I feel like that is a "double ding" if you've also filed BK. It is not fair because that judgement amount was included and successfully discharged therefore, it should also be removed from all the bureaus. But they won't do it. I've seen "dismissed" BK's stay there too.

This is so darn convoluted. argh.

[IBroke]

I'm with Ibroke -- it IS very devasting to credit reports and the bureaus will NOT remove it regardless. I have seen it drop from one bureau but never all three from just disputing it. It absolutley is a problem and I feel like that is a "double ding" if you've also filed BK. It is not fair because that judgement amount was included and successfully discharged therefore, it should also be removed from all the bureaus. But they won't do it. I've seen "dismissed" BK's stay there too.

This is so darn convoluted. argh.

Exactly! One of the 3 credit-bureaus is reporting the judgment as "Judgment in Bankruptcy" BUT reports a "liability" in the judgment-amount of $25,000. This is unacceptable! How can I STILL be "liable" for $25K? I thought my "personal liability" was discharged?

[AngelinaCatHub]

As to what MSbk said; in simpler terms, you have a Judgment (if recorded) that rides with you for 10 or more years. If you got anything of value in the future it could be attached and taken up to the Judgment's value. A Judgment liens all of your property now and in the future until it is satisfied.

A specific lien has to be filed against a real item and recorded. Like a house or car.

When you got your discharge, you were "forgiven" of the amount owed under bk protection. It did not void the fact that the Judgment exists. It is just not enforceable. The implied lien of all you own is moot at that point. A lien that is recorded against real property or other asset is still in place for that specific item only and does not go away but would be satisfied upon the sale of that item.

I had a Judgment against a person for $1200. I noted her car was free and clear. I got a Writ of Attachment. The car was worth $6500 but sold at auction for $1700 (I bought it). The first $1000 went to her as exempt car in FL. After costs, the sale only reduced the $1200 Judgment $8. I could have gone back and filed again and again (not that mean) until the whole amount was satisfied. There was no lien on that car except the implied lien of all her property. If she owned a house, I could use the Judgment value against the house only by filing a lien on the house. Only the house would be affected. If she dropped dead, the house sold, then the first to be paid would be the mortgage then me and others in the order of the filing date.

Hope that makes is clearer. Good thread for sure. 'Hub

[despritfreya]

IB,

If this is the thread you were asking me to comment on, here are a couple of thoughts. I preface this by stating I have only read the last few entries.

As it relates to the reporting on a credit report of the liability under a judgment that has been discharged:

I do not know the legal ins-and-outs of what can and cannot be reported. You indicated that you do not feel it equitable to continue to report the existence of a judgment if the debt was discharged. What is equitable and what is allowed by law can be two different things. If keeping the judgment on your report is legal then, I suspect there is nothing you can do. Remember, the judgment is valid, just not enforceable (read on).

As it relates to setting aside the State Court judgment because the ability to collect on the judgment has been enjoined under 11 USC 524:

From what I understand, you are asking the State Court to vacate or nullify the entry of the judgment from some pre petition law suit. I do not know if this is possible in your State. I can tell you that I have never attempted this in my State for any client, nor would I as I never put in appearances in State Court matters.

My spin is this. . . The judgment was properly entered before you filed bk. The enforcement of the judgment is what is prohibited under 524. The judgment was not extinguished by the filing of the bk. The ability to collect on it was. The judgment will eventually become stale under State law as the judgment creditor cannot renew it. As a result, I see no legal basis (barring any State Statute to the contrary) to ask the State Court to invalidate a properly entered (but now unenforceable) judgment. I suppose you can file a Motion in the State Court and serve it upon the judgment creditor and I further suppose the judgment creditor will not respond (how could it as that could be a violation of 524) and since there would be no response the State Court Judge would enter an Order approving the Motion. Therefore, there appears to be no harm in trying.

I do not know if I have added anything not already posted or if anything I have written gives you additional insight. If you want to PM me that is fine but I do not know if I can add anything useful to this topic.

Des.

[tobee43]

well...i certainly know that i'm totally confused here....after our discharge i filed an order to vacate an existing judgment that was turned into a "lien".....i filed it with the bk court.....a few months after our discharge....i then rec'd a signed court order vacating the judgment???? now...although i LIVE in florida and filed the order in florida the judgments were in nj.....

i took the signed court orders and promptly scanned them into my computer just in case something comes up where or if they appear in the future....now...my computer is down...but as soon as it's up i can explain what the actual orders verbal states.

so now i'm totally confused after reading this thread...what my court orders are valid vacating the the judgments????

[PHXDWTN]

Des: I saw you mentioned that the judgment will become stale and fall off on it's own because it cannot be renewed. Is thus because the debt attached to the judgment has been discharged? I read online that in AZ a judgment stays recorded for 5 years but can be renewed ever 5 years indefinitely so I'm a bit confused.

[IBroke]

Thanks, des.!

I'm aware of the fact that the judgment - if NOT vacated - stays on my report for the period allowed by law. Just like any other derogatory account included in Bankruptcy. HOWEVER, accounts IIB have to show a $0 balance - and the judgment on file is reported with a $25,000 liability. That's the issue I'm having with it.

The good thing in my case is that the judgment is already a couple of years old - and the effect on the credit-score is not that devastating on public records 2 years and older. In 2013, it should fall off anyway.
I'm just not happy with this reported HUGE liability that TransUnion is reporting. Looks VERY bad on manual credit-checks. Equifax is reporting a $0 liability and I believe that's far more accurate.

[despritfreya]

Des: I saw you mentioned that the judgment will become stale and fall off on it's own because it cannot be renewed. Is thus because the debt attached to the judgment has been discharged? I read online that in AZ a judgment stays recorded for 5 years but can be renewed ever 5 years indefinitely so I'm a bit confused.

The act of renewing would be a violation of 524 therefore the creditor will take no further action and the judgment will "expire" by operation of State law.

Des.

[PHXDWTN]

Thank you Des, good to know that if it can't be resolved through the Motion to Dismiss, it will eventually fall off. The judgment was filed Oct. 2008.