If you face financial difficulties and have accumulated judgments against you, you might wonder if filing for Chapter 7 bankruptcy is still an option for you.
You should understand what Chapter 7 bankruptcy entails and how judgments can affect your eligibility.
Understanding Chapter 7 bankruptcy
In 2023, 416,607 individuals filed for bankruptcy. Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals to discharge most of their unsecured debts, such as credit card debt, medical bills and personal loans. However, you typically cannot discharge certain debts, like student loans and child support, through Chapter 7.
The impact of judgments
Judgments occur when a court orders you to pay a debt after a creditor sues you and wins the case. These judgments can result in various consequences, such as wage garnishment, bank account levies and liens on your property. However, even if you have judgments against you, you may still be able to file for Chapter 7 bankruptcy.
Navigating Chapter 7 with judgments
While judgments can complicate the bankruptcy process, they do not necessarily disqualify you from filing for Chapter 7. However, certain types of debts, such as tax liens and domestic support obligations, may not be dischargeable through bankruptcy.
When you file for Chapter 7 bankruptcy, an automatic stay goes into effect, temporarily halting most collection activities, including those related to judgments. This can provide relief from creditor harassment and allow you to work with the bankruptcy court to address your financial situation.
It is important to disclose all judgments and debts accurately when filing for bankruptcy, as failure to do so could result in a dismissal of your case or accusations of bankruptcy fraud.
