A common question we get is whether bankruptcy can stop a creditor who has already taken the debt to court and received a judgment. The answer is yes.
How Creditors Get to a Judgment
Often, creditors will hire a collection agency or even a law firm to collect on a past-due debt. This may result in you being served with a summons to appear in court. The summons will list the date and time for the first appearance.
You are not required to appear at a first appearance; however, if you fail to show up, a default judgment may be entered against you. Once the creditor obtains a judgment, the creditor can begin the wage garnishment procedure.
If you decide to appear at the first appearance, you can ask the judge to continue the hearing so you can discuss your options with an attorney. Often, the judge will give you around a month or two to do so.
Bankruptcy Stops the Creditor — At Any Stage
Bankruptcy can stop the creditor from collecting against you, regardless of the stage the lawsuit may be in. For example, if a judgment has already been entered, filing bankruptcy would prevent the creditor from enforcing that judgment.
Bankruptcy does not need to be filed before the lawsuit, or before the judgment, or before the garnishment. It will stop the creditor at whatever stage the creditor is at.
Our Recommendation: Appear and Ask for a Continuance
With that said, we do recommend that you appear at your first court appearance and ask the judge to continue the case so you can meet with an attorney. Often, if we file before a judgment is entered, we can help reduce the negative impact a judgment would have on your credit report.
As with most circumstances, if you have specific questions, feel free to contact us for advice.
Ready to Stop a Judgment or Garnishment?
Whether a lawsuit is just starting or a garnishment is already underway, it is not too late to act. Our attorneys handle Chapter 7 cases across all of Northern Illinois — consultations are free and most clients never need to appear in court in person. Call us at (815) 312-4725 to get started.
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A free, no-pressure phone consultation is the first step. Find out where you stand in about 15 minutes.