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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17223
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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Im filing chapter 7 bankruptcy and the BK attorney tells me

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I'm filing chapter 7 bankruptcy and the BK attorney tells me that my questionnaire looks good, and I pass the means test so things should go fairly smooth. A collection firm is presently suing me for credit card debt and I expect they will have a judgment soon. I've been told that my bankruptcy will "take care" of the judgment. But what exactly does "take care of" mean in this case? Does the bankruptcy simply relieve a need to pay on the judgment? Or does it also erase the existence of the judgment from my credit record? If not then can I take some follow up action to erase it myself?

Also, I've learned that secured debts don't get wiped in Chapter 7 without liquidating the secured item. If this collection firm gets the judgment, can they somehow use it to get a lien on my car or find a way to make sure it survives the bankruptcy as a secured debt? The credit line through said collection firm has nothing to do with financing my car in any way.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

If it is a credit card debt and it becomes a judgment, after you file a bankruptcy it will be discharged, meaning it will be removed as a debt on your credit repoert.

WALLSTREETESQ :

However, the judgment would still be listed, if you file your bankruptcy after the judgment, however once the bankruptcy is filed your credit report would state that the judgment was discharged.

WALLSTREETESQ :

A credit card debt is unsecured, and it would have to be converted to a lien and then placed on your personal property. The process takes time and is not common, but if they do place a lien on your property, the bankruptcy would still discharge it, but you would have to file a motion to avoid the lien

WALLSTREETESQ :

Chapter 7 debtors and Chapter 13 debtors can avoid a judicial or nonpurchase money lien. The debtor should express his intent to avoid the lien in either the Chapter 7 Statement of Intention or the Chapter 13 Plan. The motion to avoid a lien needs to cite the debtor's right to eliminate the judicial lien under 11 U.S.C. §522 of the Bankruptcy Code




WALLSTREETESQ :

In terms of the unsecured lien being placed on your car, they would take precedence to the original lien, and they would be limited as well the the State exemptions amount as well.

WALLSTREETESQ :

In CA, you can exempt an amount of $2550 or $3300 depending on which CA exemptions you choose. Meaning if the car has equity less than the exemption amount they cannot attach a lien on it.

WALLSTREETESQ :

You can find the CA exemptions for all property here:

Customer:

Thanks wallstreetesq. Is a judgment that's listed on my report as discharged every bit as detrimental to my credit score as an unsatisfied judgment? Is there no way to ever remove the record of the discharged judgment?

WALLSTREETESQ :

An unsatisfied judgment is worse as the balance is reported as debt so our credit score is worse, also after 8 years the bankruptcy and all creditors affected would be removed.

WALLSTREETESQ :

Also be aware, after a chapter 7, your score will improve yearly and after a few years your score will be good enough to qualify you for credit again.

Customer:

I think I didn't express that right. What I mean to say is, in terms of impact on my credit score is a "BK plus a discharged judgment" much worse than just a "BK"? Or about the same?

WALLSTREETESQ :

No they are the same, the bankruptcy itself negates all negative reports prior since it discharges them through bankruptcy.

WALLSTREETESQ :

Another issue you may be interested in is this, if you filed a bankruptcy and had a credit score of 800 the bankruptcy would lower it estimated 200 points, if you had a credit score because of the judgment of 600 and the bankruptcy lowers it to 500, that is where you are hurt, if the bankruptcy is filed after the judgment.

Customer:

Yeah, that makes sense. I really appreciate the information!

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