Notice to Clients Concerning Judgments that Have Been Entered Against You Before You Filed for Bankruptcy
Once in a while, a client who has filed a successful bankruptcy comes back to us maybe two or three years later, because they were getting ready to buy or sell, or refinance a home. They tell us that all of a sudden, a judgment that they didn't know about appeared on their record, and the creditor is claiming that this judgment should be paid.
The following points are important to understand in this type of situation:
Your bankruptcy wipes out your personal obligation to pay a debt, and you do not have to worry about a creditor harassing you to collect it.
If you have a judgment against you that was obtained before you filed bankruptcy, either from somebody having sued you or for something like a motor vehicle lien, or even a lien from unemployment for some sort of improper payment of unemployment benefits, these things can come back to haunt you at a later date. You need to take special action (in addition to your bankruptcy filing) to get rid of these judgments and liens. It's weird, but these are the rules.
The way to start to resolve these issues is by first letting us know about these judgments or liens. We can do a judgment search or title search, but that costs money, and we don't want you to have to spend money to obtain information that you may already have in your records.
Based on New Jersey law, one year after you have obtained your bankruptcy discharge, we are permitted to file a motion in the State Court to legally vacate and remove each judgment or lien.
There is a fee for filing these motions based upon the complexity of the motion. In general, the minimum fees and costs run between $600 to $750. This is not something that you necessarily need to do when you file for bankruptcy, but this is something you need to be aware of for the future.
When we file these motions for you, we have to notify the attorneys for the judgment creditor, and the Court has to set a hearing date. It is important to vacate and remove these judgments because if you are buying, selling, or refinancing a home, you will usually have to pay these judgments or make some kind of deal with the judgment creditors unless these judgments are removed by the Superior Court. When we file these motions, the Court sets the hearing date, and it might take 6 weeks or more for a hearing date.
These are important issues. If they relate to you, and if you have a judgment or some kind of lien against you, make sure to tell us about it. That way we can deal with it in the proper manner so that it will not cause unanticipated problems or hardships for you in the future.