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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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In New Jersey- When does a party who has won an award in arbittration

Customer Question

In New Jersey- When does a party who has won an award in arbittration become a secured creditor?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 5 years ago.

Unless the original dispute concerned the plaintiff's right to a secured interest in property, or the award is one for a constructive or resulting trust, or equitable lien, then the plaintiff never becomes a "secured" creditor.

 

What the creditor gets is a lien against the debtor's real property in the jurisdiction where the judgment is filed.

 

But, that's not the same as being a secured creditor. An ordinary judgment (i.e., a money judgment) does not give a creditor a secured interest in the debtor's property. It merely gives the right to execute against the debtor's assets and wages so as to obtain satisfaction for the judgment and amount awarded.

 

Only where the court finds that the debtor has taken specific property of the creditor, does the creditor obtain the right to have the court order the property itself returned.

 

Note: if you're even more confused now than when you started, feel free to ask for clarification.

 

 

Customer: replied 5 years ago.
Where would such a creditor stand should the debtor declare bankruptcy?

When precisely is such lien created?
Expert:  socrateaser replied 5 years ago.

It largely depends on the type of dispute. Judgments that are the product of a defendant's intentional, fraudulent or wanton and reckless action can be refused a discharge by the bankruptcy court.

 

Judgments for ordinary debts, i.e., breach of contract, loan defaut (other than student loans), ordinary negligence, etc., will be discharged in a Chapter 7 (liquidation) action.

 

The general list of exceptions to a discharge are found in Title 11 USC 523.

 

Re the question of when precisely is the lien created, can you be more specific about the facts?

 

Customer: replied 5 years ago.
What I meant was where would this creditor stand in relation to all the other creditors, e.g., those holding mortgages and prior liens?
Expert:  socrateaser replied 5 years ago.

You would stand in the same position as any other ordinary unsecured creditor. Each unsecured creditor is entitled to a portion of any assets remaining after all of the higher priority claims are paid.

 

 

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