Once a month Chicago bankruptcy attorney Joseph Wrobel answers frequently asked questions on the Chicago Bankruptcy Update Internet radio podcast. One of the questions on this month’s program involved the potential discharge of a money judgment. The individual wanted to know if they can file for bankruptcy and include a judgment for money ordered by a local court. The judgment is currently being repaid through a wage garnishment. Listen to September’s FAQ in bankruptcy radio show.
Here was the specific question: “In 2009, I returned a vehicle for which I could no longer pay due to death of my husband and my being laid off. The financial company sued me and is now garnishing my wages at 15%. Can I include the remaining balance and stop the garnishment in Chapter 7 bankruptcy?”
Joe’s answer based on the information provided: Yes, a judgment is just another debt that can be discharged. When you owe money to a person or company and you don’t pay them, they go to court and get a judgment against you, ordering you to pay the money or the court will allow the debtor to collect it from you with the power of the court, including actions like wage garnishments. When you file a Chapter 7 bankruptcy petition, the individual garnishing your wages and any other bill and debt collection activities must stop and are forbidden during the bankruptcy as a matter of federal law.
A judgment to pay another is not a moral issue or punishment for failure to pay.
Many people think that a judgment for an amount of money is not dischargeable in bankruptcy. This is not true at all. While criminal courts ‘punish’ people for breaking criminal laws and causing harm to victims and society, a small claims or civil court is never punitive. The civil court could in many cases care less why the debt wasn’t paid, unless your credibility is otherwise at issue in the lawsuit. The civil court that enters a judgment against you simply applies the law to the facts presented to them. If you owe money, they can order you to pay. That is all.
When you file a petition for bankruptcy protection the automatic stay provision kicks in and the collection activity, in this case a garnishment, must stop during the time the bankruptcy case is ongoing. Your attorney, assuming you hire one, will send a notice to whomever manages your wage garnishment and it must stop. If the judgment amount is included in the list of debts to be discharged, the discharge notice will also be sent to whomever is collection on the judgment as well as with whomever obtained or now owns that judgment.
Deciding whether bankruptcy protection may be the answer to your financial problems requires knowing the law and how it can help you.
Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.