Judgements

[BankruptinNJ]

I had two lawsuits filed against me prior to my filing bk. One creditor had a judgement against me, and was trying to garnish my wages. (my employer informed me of this by letter). The other lawsuit was new.

I filed bk shortly thereafter. My case was discharged in November. Do I need to do anything about the judgement? I've heard of some people on here referring to "vacating a judgement". What does this mean? Do I need to do this?

[justbroke]

Yes, you have work to do. You will need to contact that court that issued the Judgment and ask a procedural question. You need to determine whether you need to only file a Suggestion of Bankruptcy or file some other procedure for that particular court. Depending on where you live and the court, you may need to get the lower court to Vacate that order.

[MSbklawyer]

With respect to the new lawsuit, I agree with JB, you need to file a suggestion of bankruptcy (or whatever the local equivalent may be) to put the court and the creditor on notice of the bankruptcy. A SOB is really just a courtesy to the court. The filing of the bankruptcy and the automatic stay that comes into place stays the litigation -- but the court has to be somehow notified of the bankruptcy and that is the function of the SOB.

Now, with respect to the older creditor -- the one who already has a judgment, there is no need for an SOB. The case is over and judgment has been entered. The procedure there is to file a motion in bankruptcy court to avoid the judgment lien. The bankruptcy court will enter an order avoiding the judgment and you will file that order in the same case file as the creditor's lawsuit.

All of the above assumes that your creditors are not domestic support obligation creditors. If they are, these answers would change.

[BankruptinNJ]

Thanks both of you for replying.

Both of these were credit card companies (Chase and another card, can't remember which one right now).

Let me see if I understand this. With the newer lawsuit, sent to me just before I filed BK, I have to notify that court (the SOB) because the discharge notice is not sent to them? Or the discharge doesn't matter because the automatic stay is gone? I'm confused. Legal terms confuse me.

With the older one - Chase-- that already had a judgement when I filed -- I must file a vacate order with that court that the lawsuit was filed in?

Are filing these things very expensive? Right now I have no job (I had a job when they tried to garnish my wages, but not anymore) and am not eligible for unemployment. I don't have anything to garnish, but I also have no money for expensive filings (which is why I filed pro se -- I even had to borrow the $299 for the filing!)

The reason I have to file these things is so that the legal proceedings just go away? I have no money and no assets. I have no car, live in a cheap rental, and have no money.

How long will they be on my credit report? I have no intention of getting a credit card for a long time (at least not until I have a job for awhile), but I do want to "clean it up" a bit.

[MSbklawyer]

You're talking about 2 distinct procedures:

First, the Suggestion of Bankruptcy (SoB): The purpose of a SoB is to stop litigation that is underway by giving the court notice of the bankruptcy. Whether you're under the automatic stay or the discharge doesn't matter. The SoB is just saying "Hey judge, hey plaintiff's lawyer -- this lawsuit is stayed by the defendant's bankruptcy. Don't proceed any further." So, in a case that has already over and a judgment rendered against you, an SoB is pointless. It only has meaning where the litigation is presently underway.

Second, the Motion to Avoid Judgment Lien (MAJL): Where a judgment has already been entered against you, that judgment acts as a lien against all your property everywhere it is enrolled. Since you don't own anything that doesn't mean much -- at least right now. But as your circumstances improve, if you buy a house, that judgment lien would attach to the house and if you ever decided to sell, the proceeds would first go to satisfy the judgment lien.

I can't speak for NJ, but here, neither an SoB or a MAJL costs anything to file. But you need to get the MAJL filed while your bankruptcy case is still open. Otherwise you have to pay another filing fee to reopen the case.

[BankruptinNJ]

You're talking about 2 distinct procedures:

First, the Suggestion of Bankruptcy (SoB): The purpose of a SoB is to stop litigation that is underway by giving the court notice of the bankruptcy. Whether you're under the automatic stay or the discharge doesn't matter. The SoB is just saying "Hey judge, hey plaintiff's lawyer -- this lawsuit is stayed by the defendant's bankruptcy. Don't proceed any further." So, in a case that has already over and a judgment rendered against you, an SoB is pointless. It only has meaning where the litigation is presently underway.

Second, the Motion to Avoid Judgment Lien (MAJL): Where a judgment has already been entered against you, that judgment acts as a lien against all your property everywhere it is enrolled. Since you don't own anything that doesn't mean much -- at least right now. But as your circumstances improve, if you buy a house, that judgment lien would attach to the house and if you ever decided to sell, the proceeds would first go to satisfy the judgment lien.

I can't speak for NJ, but here, neither an SoB or a MAJL costs anything to file. But you need to get the MAJL filed while your bankruptcy case is still open. Otherwise you have to pay another filing fee to reopen the case.

1. What about the second lawsuit that never got to a judgment? Do I need to filed an SoB in that case?

2. What's the difference between a Vacate of Judgment and a Movement to Avoid Judgment Lien?

[LynnD]

MSbklawyer... is this the same motion that is filed in all states? I'm in CO and have two older judgments (well one just got renewed) and I just filed Chapter 7 pro se as well so I'm also with BankruptinNJ with being interested on how to handle this.

Thanks SO much for sharing your knowledge.

[MSbklawyer]

1. What about the second lawsuit that never got to a judgment? Do I need to filed an SoB in that case?

I would think so. Since that litigation is ongoing -- I'm assuming that no one has dismissed the case -- then you would need to file a SoB to put that court and that judge and anyone else who looks at the file, on notice of your bankruptcy.

2. What's the difference between a Vacate of Judgment and a Movement to Avoid Judgment Lien?

Vacating, or setting aside a judgment is done, usually, where the judgment was entered wrongly or erroneously. Say, for instance, a judgment was entered against you and you were never served with process or the judgment was obtained by fraud, or the judgment was entered against you while you were protected by the bankruptcy stay -- the the judgment is entirely void and must be vacated; that is, cancelled in its entirety.

Avoiding the judgment lien, on the other hand, simply cancels the judgment's effect as a lien on your exempt property. Otherwise, the judgment remains intact. ** See disclaimer below.

[MSbklawyer]

MSbklawyer... is this the same motion that is filed in all states? I'm in CO and have two older judgments (well one just got renewed) and I just filed Chapter 7 pro se as well so I'm also with BankruptinNJ with being interested on how to handle this.

I would certainly think so, in general at least. But there's a lot of geography between where I am sitting and where you are sitting; and bankruptcy courts are notorious for having their own idiosyncrasies and local procedures for things. So do your homework. I think that despritfreya, another attorney that posts here, is from CO so you may want to inquire of him. Also HHM, whose love of Scotch whiskey is legendary, is from CO as I recall. He could be bribed with a glass or two of the stuff and would probably send you away with more forms than you could carry.

[strummerfan]

I was under the understanding that including court liens in the bankruptcy automatically releases that lien and vacating the lien was procedural at the lower court level. I am aware that I have to follow the local court procedure to vacate the judgment but since the lien was included in the BK they cannot collect...

What am I missing here?

[justbroke]

[QUOTE=strummerfan;482036]I was under the understanding that including court liens in the bankruptcy automatically releases that lien and vacating the lien was procedural at the lower court level. I am aware that I have to follow the local court procedure to vacate the judgment but since the lien was included in the BK they cannot collect...[/QUOTE}You're missing the 2 rules of Liens in Bankruptcy.

Rule #1: All Liens Survive Bankruptcy

Rule #2: When in doubt, see Rule #1

A lien is either consensual or non-consensual and the only way to "satisfy" a lien is to either pay it, or have it avoided (or vacated) through a court procedure.

While they cannot collect -- IF they were constructively or actually noticed of the bankruptcy -- they can certainly take all actions available to them under State non-bankruptcy law to exercise their right of repossession, foreclosure, or to seek an order of replevin from a court.

This is one of the part about being pro se that many miss. While the process of demanding money is stayed by the permanent discharge injunction, the creditor retains all rights that a secured creditor has when there is a lien that was not avoided (or vacated) during the bankruptcy.

[strummerfan]

[QUOTE=justbroke;482336]

This is one of the part about being pro se that many miss. While the process of demanding money is stayed by the permanent discharge injunction, the creditor retains all rights that a secured creditor has when there is a lien that was not avoided (or vacated) during the bankruptcy.

The judgment was included and not avoided, from what I gather I just need to follow the local court procedure showing the lien was included and discharged in the BK. The creditor has no right to collect, one judgment holder has already filed a release of lien without my request i am told that they do this mainly to avoid someone in their large firm of violating the automatic stay and the discharge of the lien.

[strummerfan]

I think we're crossing the wires between a secured lien and unsecured lien, in my case the judgments were unsecured credit cards nothing was garnished, nothing was secured to satisfy the judgment.

[justbroke]

I think we're crossing the wires between a secured lien and unsecured lien, in my case the judgments were unsecured credit cards nothing was garnished, nothing was secured to satisfy the judgment.

Once a judgment is recorded as a lien, it is secured. I think you're confusing some bankruptcy rulings on being "partially" secured, "wholly" secured, oversecured and "wholly" unsecured. It doesn't matter in this context. I think you may also be confused because the judgment lien was due to an unsecured debt. That just made it secured debt. You don't, technically, either "include" or discharge a lien. However, you can avoid a lien.

A lien exists outside a bankruptcy and continues to exists unless it is somehow extinguished.

One of the ways to extinguish -- or void -- the lien, is to file a Motion to Avoid Lien under 11 USC 522(f). This is where the lien impacts an exemption that you have in the property that the lien is for.

If you are pro se, you should really do your homework and discover just what types of judgments you have. The fact that a creditor released a lien without you requesting is really not material. The fact is that many creditors just don't want to deal with a bankruptcy for fear of the stay. Even though a properly recorded judgment lien, that was recorded prior to filing of the bankruptcy petition, is a valid lien and passes through the bankruptcy.

A judgment lien creditor, while having no "right" to collect, does in fact have the right to foreclose upon (or repossess) the property that is securing the lien. This makes no difference whether it is a consensual lien or non-consensual lien.

I'm trying to say, don't just "rest" on any fact that a creditor can't collect a discharged debt. The problem is where there is a lien. If you want a "clean" case closing, then you should deal with (properly recorded) judgment liens in the bankruptcy court using the procedures already in place.

[strummerfan]

I know that I have to take additional steps to vacate the civil judgments at the court that issued them but given that I have included the debt and judgments in the BK, the creditor cannot garnish or levy my bank accounts after they have been discharged in the BK.

Am I correct on this?