Impact of Bankruptcy on Judgments

If you’ve got a judmgent against you for an unpaid credit card debt, personal loan, medical bill, or similar debt then you may be thinking that filing for Chapter 7 or Chapter 13 personal will solve the problem.  Well… are CORRECT!

A judgment is a common reason for Maryland residents to consider filing for bankruptcy.  In Maryland a judgment creditor has the right to freeze your bank account, take part of your wages, and continue to add interest on the amount due at a statutory rate until the debt is paid in full.

If you’re living paycheck-to-paycheck as is, the prospect of having to surrender a portion of your income isn’t appealing.  And given the high cost of living in Maryland, every dollar counts.

It’s true that filing for bankruptcy will stop the income execution (wage garnishee), lift the hold on your bank accounts, and give you some breathing room. 

However, be aware that a judgment is a matter of public record, and creates a statutory lien on any real estate you own as of the date on which the judgment is filed.  Your bankruptcy may eliminate your personal liability for payment, but if you own any real estate then that judgment will still need to be paid in full (plus interest) when you sell the property.

The only way around that lien is to file a motion with the court during your bankruptcy case.  Whether the facts and circumstances of your situation warrant such an action (or whether the motion would be approved) is up to you and your lawyer.

Even for those who don’t own any real estate at the time the judgment is entered, filing for bankruptcy will not wipe out the civil court judgment itself.  The judgment will remain as a hollow shell, on file with the civil court (and on your credit report) until some action is taken.

So, if you have a judgment against you or if a company has filed for a judgment against you, you can file Chapter 7 or Chapter 13 personal bankruptcy in Maryland to stop the wage garnishment, unfreeze your bank account and eliminate the debt.  We are Maryland Bankruptcy Lawyers who file Chapter 7 and Chapter 13 bankruptcy cases for Maryland residents every day.  If necessary, we can file the same day.  Call and speak with a bankruptcy lawyer today at (410) 766-4044 or (301) 587-8900 and we will provide the assistance that you need.  We look forward to hearing from you.