In most cases, obtaining a discharge will be the primary reason why a borrower files for bankruptcy. If a debt is discharged in bankruptcy the debtor will be released from all personal liability on the debt. Further, creditors will be restricted from taking any collection action against the debtor for debts discharged in bankruptcy. Often, a debtor can eliminate judgments in bankruptcy and their unsecured debts with a Chapter 7 or Chapter 13 discharge. However, each case is unique and not everyone is eligible to eliminate judgments in bankruptcy and obtain a discharge. If you have judgments, credit cards, medical bills, collection accounts, or other debts contact a Tampa bankruptcy law firm to discuss your specific case.
How to Eliminate Judgments in Bankruptcy
Under Bankruptcy law, a discharge will eliminate judgments in bankruptcy, “to the extent that it is a determination of the personal liability of the debtor.” Any action to collect the money from the debtor will be barred. Nevertheless, creditors can still take collection action with respect to the property/ collateral. If a debt secured by collateral, such as a mortgage or car loan is discharged the lien on the collateral will not be discharged, only the debtor’s personal liability to pay back the money is discharged. For instance, the creditor for a debt discharged in bankruptcy can still foreclosure on a home mortgage. However, in the event the foreclosure sale of the property does not provide enough funds to pay the mortgage in full, the creditor will not be able to seek a deficiency against the borrower.
Mortgages and car loans are not the only secured debt that will remain a lien on property after you eliminate the judgments in bankruptcy. If the creditor obtained a judgment lien prior to the bankruptcy, the judgment lien will still remain on the property. In Johnson v. Homestate Bank, the U.S. Supreme Court ruled that a creditor’s right to foreclose on a lien is not extinguished by the bankruptcy discharge.
What Comes After You Eliminate Judgments in Bankruptcy
Bankruptcy law 11 U.S.C. 524(a) precludes creditors from trying to hold the debtor personally liable for a discharged debt. For instance, threatening to garnish wages, sue the debtor, and garnish bank accounts will all be a violation of debt collection laws if the debtor was able to eliminate the judgments in bankruptcy. A willful violation of the ban on collection activity can lead to sanctions being imposed on the creditor. These sanctions can include an injunction, monetary sanctions, reimbursement of funds paid by the debtor, and even punitive damages. Additionally, the creditor may be responsible for reimbursing a debtor for the money they paid to a Tampa bankruptcy law firm to stop the collection action. See bankruptcy case In Re Burson.
In order to obtain sanctions against a lender, the collection action must be a willful act by the creditor. Voluntary payments made by the debtor will not expose the creditor to sanctions for illegal debt collection activity. However, the payment must truly be voluntary and not a response to the creditors actions to induce payment. For instance, paying a creditor to end harassment of the debtor’s family will not be considered a voluntary payment. Voluntary is viewed in an “objective sense as referring to repayment that is free from creditor influence or inducement, regardless of whether the debtor was motivated by forces unrelated to the creditor.” See In Re Hudson. For more information, contact a bankruptcy attorney in Tampa to discuss your specific case for eliminating judgments in bankruptcy.
Tampa Bankruptcy Law Firm
If you need to eliminate judgments in bankruptcy Florida Law Advisers, P.A. may be able to help. We are bankruptcy law firm in Tampa, committed to providing personalized attention and dedicated legal counsel. All of our initial consultations are free and convenient payment plans are always available. Regardless, if you need help with Chapter 13, Chapter 7, or other debt relief our professional legal team will provide you with competent legal advice you can trust. Call us now at 800 990 7763 to speak with a Tampa bankruptcy lawyer.