What happens to a judgment in your favor if you file bankruptcy?

Question

I was awarded a sizeable judgment in civil court after being conned out of a lot of money. 7 years later, I am left with no choice but to file for bankruptcy. What happens to the judgment?

Richard Gonzales · Answer

The judgment becomes property of the bankruptcy estate. If the Trustee thinks he/she can collect the judgment, they will. They will pay off your creditors (creditors who file a proof of claim), and any excess amounts will be turned over to you. If the Trustee does not think the judgment is collectable, the Trustee will abandon any interest in the judgment.

Jeffrey Solomon · Answer

When you are owed money by a third party and you file chapter 7 bankruptcy, the chapter 7 trustee has a right to collect for the benefit of your creditors any funds that are owed to you. You would be giving up your rights to collect on the judgment unless the trustee "abandons"  any right to collect these funds. After 7 years it may be this judgment is not collectible.

Alan Ramos · Answer

The judgment in your favor is an asset that must be listed in your Schedule B. You should consider exempting as much of the judgment as you can. If you are filing a Chapter 7, the Trustee may try to settle the judgment and use the proceeds to pay creditors.

Daniel Garner · Answer

Any claim you have against someone else for money becomes property of the bankruptcy estate under the supervision of the trustee. You might be able to claim an exemption for all or part of it, and the trustee might not pursue it if s/he deems it un-collectible, but you certainly have to report it. The theory is that the judgment could be used to pay part of the debt you are discharging in bankruptcy. The trustee typically has more resources to pursue collection than does a bankrupt debtor.

Paul Ross · Answer

The Chapter 7 Trustee steps into your shoes and can attempt to collect on the debt (there is not an exemption for it under Idaho law). Of course it can depend on whether or not the debt is collectible whether (s)he will move forward on it.

Deborah F. Bowinski · Answer

The judgment is an asset and must be listed as such. Unless there is an exemption that fits and that you claim properly the trustee in your bankruptcy case will "step into your shoes" as far as owning the right to try to collect on the judgment. You said you obtained judgment but you did not indicate what, if anything, you have done or are doing to try to collect on it. You really should speak with a bankruptcy lawyer who can advise regarding the specifics of your situation.

Marjorie Guymon · Answer

The trustee will review and determine whether the judgment can be collected. If not, and it sounds like it can't and may even now be "dead" due to statute of limitations on collection, nothing will happen to the judgment.

Marlin Branstetter · Answer

The judgment becomes property of the bankruptcy estate. Depending upon what other assets you have a portion of the judgment may be exempt but if the judgment is collectible the bankruptcy trustee may have the proceeds assigned to him and use the proceeds to pay your creditors. If the judgment does not appear to be collectible the trustee may abandon it and you could then attempt to enforce it.

Christopher Kane · Answer

If you are a judgment creditor and have not yet been paid, that is an asset of yours that will be taken into account when you file bankruptcy. The Trustee might be able to pursue that judgment debtor and, if they are successful, may distribute the money among your creditors. However, there might be an exemption available to you that would protect all or part of that judgment. You should consult with an experienced bankruptcy attorney to determine the ramifications of your situation.

Jeffrey Heineman · Answer

First, if you received your judgment 7 years ago and did not renew it before the end of 5 years, then your judgment is no good. You must renew your judgment before the end of the 5th year after its entry, and then subsequent renewals. If you did renew it, and therefore still effective, then it is property of the estate, and the trustee may attempt to collect from the individual. While it is property of the estate and the trustee may collect from the one who owes you, you may still attempt to collect from that person after the bankruptcy is over (if he/she still owes money on the judgment after the trustee is done). Of course, the trustee may not find it worth his/her effort to attempt collecting from this individual and he may abandon the claim.

Stella Havkin · Answer

The trustee can go and collect on the judgment assign it's collectible. The trustee then uses the money collected to pay your creditors.

Mark Cherry · Answer

You need to list the judgment as an asset. The trustee has the right to pursue it and collected can be used for your creditors. If the trustee chooses not to collect it, ask the trustee to abandon the asset so you can continue collection action.

Stuart Nachbar · Answer

Technically that Judgment is part of the estate and it goes to the Trustee who can collect it and use the funds to pay creditors. Get with a good Bankruptcy attorney who may be able to exempt out part of it for you.

Lori Haskell · Answer

Depends on the amount and what exemptions you have. You can exempt lawsuit proceeds, but only up to a certain amount. The rest would go to the court to pay off your creditors and anything remaining after paying creditors would go to you.

Ron Salas · Answer

Most likely the judgment will become property of the Estate, the Trustee will take ownership and use the proceeds to pay your creditors.

Steven Fluhr · Answer

The judgment becomes part of your bankruptcy estate unless the trustee abandons his/her interest in the judgment.

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What happens to a judgment in your favor if you file bankruptcy?

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