Can Judgments be Discharged in Bankruptcy?
Yes, judgments can be discharged in bankruptcy. The vast majority of judgments in Minnesota are for ordinary consumer debts, such as credit cards, medical bills, unsecured loans, and deficiencies, and these types of judgments can be discharged in bankruptcy (so long as the debt wasn’t incurred through fraudulent or other willful and malicious actions). Some debts, such as student loans, certain tax debts, or debts that are incurred through fraud, embezzlement, or theft, are not dischargeable under bankruptcy law; judgments for these types of debts are likewise not dischargeable.
What is a judgment?
A judgment is simply a court order declaring that a person or business owes a debt to another person or a business. A debt becoming a judgment does not make it any different or more difficult to discharge in bankruptcy than any other debt that has not been reduced to judgment. The important factor in determining whether a judgment can be discharged is what is the underlying debt. The most common type of non-dischargeable judgment we see are for private student loans. While bankruptcy cannot usually discharge this type of judgment, bankruptcy can still provide a way to manage and protect yourself from this type of judgment.
How do I know if I have a judgment against me?
In order to get a judgment against someone, the person seeking the judgment (the plaintiff) or their attorney must send to the person who allegedly owes the debt (the defendant) a summons and complaint. The summons is a notice telling the defendant that they are being sued, and telling them how to respond and what happens if they don’t respond to the complaint. In Minnesota, most summonses do not have a court date listed. The complaint is a document that states the factual allegations of why the plaintiff thinks the defendant owes the plaintiff money, and asks for a court order (a judgment) to be entered declaring that the defendant owes the plaintiff a specific amount of money. In Minnesota, the summons and complaint must be served on (delivered to) the defendant, which can be done by personally handing it to the defendant or a competent person at the defendant’s residence, or mailed to the defendant’s residence. Once the summons and complaint is delivered, the defendant has 21 days to respond. If the defendant does not respond, then the plaintiff can get the judgment ordered by the court without further action (by default). Once the judgment is entered, then the plaintiff may take actions to try to collect on the debt through garnishment or levy.
How can I get rid of a judgment?
Judgments in Minnesota are valid for 10 years after they are entered, which means a creditor can try to collect on the judgment debt for 10 years. The judgment creditor can renew the judgment for an additional 10 years. This means that a judgment can potentially follow a person for 20 years! The ways to deal with a judgment are to either pay the judgment in full, work out a payment agreement with the judgment creditor, or file bankruptcy. Filing bankruptcy is almost always the fastest, cheapest, and most effective way to get rid of judgments. If you have a judgment or a creditor is trying to get a judgment against you, contact us to find out whether bankruptcy can discharge your judgments.