Many individuals contact us with concerns about credit card debts that have been turned over to collections.  Often, the client is concerned about what will happen if the collections agency obtains a judgment on the debt before the client files for bankruptcy.  The short answer is that if the underlying debt would have been dischargeable (such as credit card debt), the judgment can also be discharged. Unless the judgment is based on the kind of debt which would not be discharged (i.e. child support, spousal maintenance, fraud, personal injury resulting from DUI, student loans, etc.), the discharge which you get in bankruptcy will extinguish your personal liability for the debt.

Unfortunately, the discharge of a judgment does not remove the judgment from property to which it might have attached before the discharge.  The judgment cannot be used to collect against you personally, but it may still be used against property which you owned before the discharge. This is the case when a judgment is recorded, as it then becomes a lien, similar to a mortgage, on property that you own. Even though your personal liability on the judgment will be discharged, the lien will remain on the property. You will not be able to sell the property until the lien is paid or removed, and in some cases the creditor may sell the property to pay the lien. If the property is exempt (i.e. your homesteaded house, or mobile home) that lien can be removed pursuant to 11 U.S.C. Sec. 522(f).   This is not part of the ordinary bankruptcy procedure. While your bankruptcy is open, you must request your attorney to file a Complaint to Avoid a Judgment Lien; there is typically an extra charge for such an action.

Drew Broaddus