Can I Pursue Payment on a Judgment Post-Bankruptcy? - Westgate Law

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Can I Pursue Payment on a Judgment Post-Bankruptcy?

There are a lot of questions that get asked over and over by people considering bankruptcy or petitioners in the midst of the bankruptcy process. They can usually be found on any bankruptcy lawyer’s FAQ page. Then there are the questions that I wish were asked more frequently. One such question is, “If I was awarded a judgment years ago, what happens to it when I file for bankruptcy?”

It’s a very important question and one that I address with every client whether they bring the topic up or not. When filing for bankruptcy you want to protect your right to collect money from anyone who owes you or against whom you have a judgment. You still want to be able to collect from them in the future. In most cases, this is possible.

You will most likely be able to pursue a judgment against an individual or company even after receiving a bankruptcy discharge. But to do so, you need to disclose the judgment in the bankruptcy schedules.

Every bankruptcy petitioner is assigned a bankruptcy trustee. The trustee is the one who determines what funds (assets) are available (and not protected by law) to distribute amongst creditors. The judgment that you hold is considered an asset. It has to be listed in the schedule of assets and it’s possible that you may not be able to protect it. The trustee can pursue the person or company against which the judgment is held for payment and then use the funds received to pay your creditors.

Having said that, it’s not likely. In most cases, the trustee isn’t willing to spend the type of time, funds or energy that are necessary to collect the debt. If it is a judgment that you have held for years and have been unable to obtain payment, they probably aren’t going to have any better luck. When the trustee abandons the pursuit of the judgment (asset) the right to pursue it becomes yours again.

Why do I care so much whether or not my clients disclose this type of situation to me initially? It’s important to know immediately because it needs to be included in the schedule of assets. Any failure to include it as required could prevent you from collecting on it once you receive your bankruptcy discharge. The bankruptcy trustee must be provided with the opportunity to access all your assets even if they probably aren’t going to pursue a judgment.

For detailed information regarding bankruptcy and how to file in southern California, please get in touch with the bankruptcy attorneys at Westgate Law.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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