Winning a Judgment Disrupted by Bankruptcy - Westgate Law

Call Now For a Free Consultation
Se habla Español

Winning a Judgment Disrupted by Bankruptcy

When you hire someone to complete a job, pay them up front and then have to watch them walk away from it without completing it you can file a judgment against them in court in order to receive a return on the price you paid for any work that wasn’t done. If the individual you receive the judgment against then files for bankruptcy, the situation becomes a lot trickier.

It’s a tough situation because there are a lot of variables attached to this type of situation. Every situation will have specific details that can change the outcome, but generally speaking, collecting on a judgment from someone who declares bankruptcy is an uphill battle. In most cases, the judgment holder rarely collects on the debt after the other party files for the protection offered by bankruptcy. You still have a case against them, but the cost of proving your case would often outweigh the amount you would be able to recover.

That doesn’t necessarily mean you should give up hope. Stay optimistic. Before completely writing off the judgment and deciding that you won’t be able to collect on what you are owed:

  1. Fraud judgments cannot be eliminated by bankruptcy. If this is the type of judgment you have against the bankruptcy petitioner, contact a southern California bankruptcy attorney with experience in adversary proceedings (lawsuits inside a bankruptcy). To protect your judgment in this situation would require the filing of a very specific motion while the bankruptcy is active.
  2. Do you have a specific reason to claim that the debt cannot be eliminated through bankruptcy? Contact a bankruptcy attorney experienced in these matters in order to determine whether or not proving the debt is not eligible for elimination would leave you with a worthwhile case against the debtor.
  3. Are you aware of any “problems” with the bankruptcy paperwork? Were they truthful? You may have information that indicates that the bankruptcy petitioner was not completely truthful in completing their bankruptcy paperwork: hidden assets, other properties, etc. You may be able to have the bankruptcy case thrown up for bankruptcy fraud. If the individual scammed you out of money due, there could be a history of similar “shady” behavior that could end up working to your benefit.
  4. Is there a company you can go after for payment? You may not be able to enforce the judgment against the company’s owner, but you could try enforcing it against the company itself instead. This is often difficult due to the fact that you already have the judgment against the owner as an individual, etc. It can also be difficult if the owner is simply willing to dissolve the company you aim the judgment at and start over with a new company structure and name. This route could end up being a money pit on your end as you try to go after company after company owned by the same individual.

Sadly, in cases like this, it’s not always going to be the person in the “right” that comes out on top. The law doesn’t always come down to what’s right and what’s wrong. Sometimes it’s simply about who has the money to stick it out in the fight the longest. You’ll have to consider the amount of money it will cost to recover the judgment amount and whether or not it’s worth the expense. Contact your southern California bankruptcy attorney at Westgate Law today.

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.

Call Now For A Free Consultation

Scroll to Top