What is a Judgment

• A judgment is what a plaintiff (the person who initiates the lawsuit against another) obtains from the court in a lawsuit if he wins. Imagine that one person injures another through reckless driving. If the injured person sues and wins, he will obtain a judgment. A judgment is basically a court order to pay money.
  
  

Ways of Enforcing a Judgment

• A creditor with a court order can enforce a judgment through a number of methods, such as freezing bank accounts, garnishing wages and seizing assets. Additionally, the judgment can act as a lien on real property (real estate). A creditor with a lien on a property has a legally protected interest in the property and can cause it to be foreclosed on.
  
  

The Automatic Stay

• Beginning when a person files bankruptcy, the law automatically prevents creditors from making any type of collection attempt against him, including a lawsuit or enforcement of a judgment. In bankruptcy, a creditor with a judgment can no longer freeze bank accounts, garnish wages, force foreclosure, or make other attempts to enforce the judgment once the automatic stay is in place.
  
  

The Discharge

• At the end of a Chapter 7 bankruptcy case or after the completion of a court-approved repayment plan in a Chapter 13 bankruptcy case, a debtor obtains a discharge. The discharge eliminates remaining debts, allowing the debtor to move forward with a clean slate. After the discharge, the debtor is free of the obligation to pay judgments except to the extent that they might be liens. Liens attach to the property itself and are more difficult to remove.
  
  

Considerations

• Before a discharge, the court pools non-exempt property into a bankruptcy estate, of which creditors can obtain a pro rata share. Lien-holders, however, get first right to the collateral in which they have a property interest. In the case of a judgment, this would be real property to which the judgment attached. Even after a discharge, an existing lien on real property might not go away. The bankruptcy code attempts to provide adequate protection for the property interests of creditors as well as relief for debtors. Every state has exempt property, deemed essential to living, such as clothing, which a debtor can keep no matter what. Even if a debtor no longer has to pay a judgment, it will remain a factor on his or her credit report as the bankruptcy itself will be a factor.