If Discover obtains a judgment against me -- will it go away in BK?

[NewPage]

Alrighty....

Stopped paying Discover some time last year, like March or April, something like that. Letter in July or so saying I had til the end of September to make payment/arrangements or they would forward my account to an attorney to obtain a judgment against me. They did that. I was served on 12/27/10.

Papers say I have 30 days from service to "appear and defend the complaint filed against [me] in the above entitled action" and "in case of your failure to do so, for want thereof, plaintiff will apply to the court for the relief demanded in the complaint."

"You must 'appear' in this case or the other side will win automatically. To 'appear', you must file with the court a legal paper called a 'motion' or 'answer'. The 'motion' or 'answer' must be given to the court clerk or administrator within 30 days, along with the required filing fee. It must be in the proper form and have proof of service upon the plaintiff's attorney or, if the plaintiff does not have an attorney, proof of service on the plaintiff".

I figured this to be taken care of when my attorney had everything completed and I filed later this month. A new snafu has arisen though, in that we are expecting a tax refund (federal and state). I have since learned that we cannot check the "apply to 2011 estimated taxes" on the return, and that the trustee will very likely take the refund to disburse to my creditors. We really need to avoid that, and are trying to find a way to file taxes, get and pay out the refund, and then file BK -- all before the 27th of this month! We are waiting on mortgage interest documents only to file taxes.

So, from what I gather there are a couple ways to do this:

1) File an answer to the suit to delay a bit ($137 if I am correctly understanding the court's fee schedule)

2) File taxes and pay quarterly taxes/other necessary expenses with the refund (carefully documented to the last penny)

3) File bankruptcy

OR

1) Let Discover get their default judgment

2) File taxes as above

3) File bankruptcy

My question is -- assuming Discover gets the default judgment, will that disappear in the BK? I have no wages to garnish, my bank accounts do not have anything significant in them.

What would you do?

If the suggestion is to file an answer -- how exactly do I do that? What do I say? How do I serve the plaintiff's attorney (name and address are on the papers, I cannot do it in person as they are several hours away and I don't know anyone in the area, at least not anyone that I want to involve in this).

[free2breathe]

The debt associated with the judgment is discharged, but the judgment itself does not just disappear. Once you receive your discharge, either you pay your attorney to file or you yourself file a Motion to Vacate the judgment in the court where the judgment was granted. If you choose to do that yourself, you would just contact the clerk of that court and ask what form, if any, they have for vacating a judgment, what the process is, etc. Make sure you preface any question to a court clerk with, "I have a procedural question." This lets them know you aren't asking for LEGAL advice, just asking about the process.

If you search this forum, you will probably find several instructions or links for information to file an answer. I've not had to deal with that, so I don't know exactly how it's done.

[df04527]

Another opinion to consider -- if, in fact, you have no defense to the lawsuit and are planning to file BK for sure -- then don't worry about it. Again, my opinion, but if the end result is going to be BK -- this judgement would be included in your BK -- so why spend 137. to answer? The only extra thing that will have to be done extra is a "motion to vacate" the judgement with your BK. You may have to pay your BK attorney extra for that motion also.

[AngelinaCatHub]

You basically got a form letter. It sounds like a subpoena and I would attempt to respond and demand an accounting of the amount. That may buy you some time. Judgments can be nasty things. Check into the possibility of an indigent forgiveness form for you filing. Here in FL there is no cost for filing and you will file with the Court, not the Plaintiff except a copy to them and USPS (mail) is good enough to send the copy. That is, if a suit truly has been filed. Sounds like it has. 'Hub

[treehugger1]

It will be a bit more complicated if the plaintiff gets a default judgment. In most circuit court civil cases here, a judgment will automatically be entered with a lien against any and all real property. The lien can also be removed after/during the BK process, but I don't know how much difficulty the lien adds to everything. If you are walking away from your house, then this should be know big deal. If a house is involved, you might discuss the possibility of a judgment and liens with an attorney.

Try the following: Send a letter to the circuit court where the case was filed asking for an extension of time to file an answer. Begin with "Your Honorable Judge," and state that you are discussing bankruptcy options and are requesting an additional 30 - 45 days to answer the complaint. It sounds as if these statements would be true and I believe the circuit court will likely grant you an extension. You miht even ask the court clerk how you go about requesting an extension. I did this once. I had to send my request to the judge, and I also sent a certified copy to the plaintiff's attorney. I was granted an additional 30 day to file an answer.

[GoingDown]

Yes, if there are assets such as real estate etc., the judgment lien will attach to them and can be avoided through bankruptcy up to the amount the lien impairs your exemption amount. If however, the asset has more equity than your exemption amount, that part of the lien will survive bankruptcy.

But for most people filing BK, this is not an issue, because they have little or no equity going into bankruptcy.

Bankruptcy discharges the underlying debt of the judgment, and after BK, you simply file a motion to vacate the judgment since the underlying debt no longer exists.

[NewPage]

Try the following: Send a letter to the circuit court where the case was filed asking for an extension of time to file an answer. Begin with "Your Honorable Judge," and state that you are discussing bankruptcy options and are requesting an additional 30 - 45 days to answer the complaint. It sounds as if these statements would be true and I believe the circuit court will likely grant you an extension. You miht even ask the court clerk how you go about requesting an extension. I did this once. I had to send my request to the judge, and I also sent a certified copy to the plaintiff's attorney. I was granted an additional 30 day to file an answer.

Thank you! This is an interesting idea, I did not know something like this could be attempted. It's worth a try, right?

Could you possibly tell me exactly (more or less) what to say? Like this?

"Your Honorable Judge,

I am in the process of investigating bankruptcy options, and am requesting an additional 30-45 days to answer this complaint. (Do I include a copy of the complaint?)

Thank you for your time and consideration of this matter.

Respectfully,

NewPage"

????

Would I send it just to the judge? By mail or can I hand deliver? The courthouse is not very far from me, and that way I would know it got there, not lost in the mail etc.

[NewPage]

Re: Equity in the house

We have about 47500 in equity. Oregon's exemption is 40k single filer, 50k joint. My attorney told me that Oregon is a "tenancy by the entireties" state, and so I guess they figure my share of the equity based on my life expectancy or something like that. I'm only 2 years younger than my husband, so presumably my share would not be much more than half, maybe 60% or something I'd guess. Even if they said that I had 80% of the equity, that still falls under the exempted 40k.

The Discover suit is for a little less than 5300, and of course costs/fees, at 9% a year if awarded.

So would a judgment have any effect on my equity? My husband's hope is to refi after the bk in just his name.

[catleg]

If the card is an individual account and the house is deeded Tenancy By Enitreties it can't attach a lien to your property,

[NewPage]

Really?

[catleg]

Defined

A decent description of how it works

Here is another walkthrough

[treehugger1]

Your letter requesting more time sounds fine. There is no guarantee.

You also stated that discover would be awarded 9%. That is true only if your account agreement was 9% or less. State law says post-judgment interest is 9% or contract amount. The prevailing party's attorney costs will increase at 9% annual. At least this is how my judgments and post-judgment determinations by the court read.

Maybe your local district court interprets things differently. Although I would think in Oregon all post-judgment interest decisions are identical for civil matters.

[NewPage]

Defined

A decent description of how it works

Here is another walkthrough

Thank you tons for those links!!

[NewPage]

Your letter requesting more time sounds fine. There is no guarantee.

I figure the letter is at least worth a shot.

The 9% is what the papers say -- I think when I got the acct is was 7.99%. Can't remember now, it's been awhile.