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Filing Bankruptcy After a Creditor Gets a Judgment in a Lawsuit

Yes, you can.  Many clients come to me, after having been sued by one or more of their creditors, concerned that it is too late to do anything about that particular debt.   I would have to say, though, that in the vast majority of cases, a debtor can still wipe out that debt, even if a judgment has been entered.   A complication can arise, however, for a debtor who is a homeowner.

Once you file for bankruptcy protection, creditors are barred from taking any action against you. If they sued you, but a judgment has yet to be entered, then they cannot now do so without asking the bankruptcy court first. In this situation, that creditor is treated just like any other unsecured creditor.  If you do not own any real estate, even the entry of a judgment does not create issues in and of itself.  For homeowners, however, a judgment may change things.  Learn more here.

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