Can a Consent Judgment be Wiped Out in Bankruptcy?

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If two parties agree to a settlement that will in a lawsuit, it is known as a consent judgment. This type of judgment occurs when both parties decide on an agreement, write the agreement on paper and have it signed by a judge.

Example Of Consent Judgment

For example, a consent judgment would occur between a debtor and creditor if they both agreed on a settlement that is less than the full amount owed by the debtor. They would write down the terms relating to the payment arrangements for the debtor and have it signed by both parties as well as the judge. This would bring all court proceedings to an end.

Some Consent Judgments Cannot Be Discharged In A Bankruptcy

Bankruptcy laws stated that certain types of judgments cannot be discharged when an individual files for Chapter 7 bankruptcy. Typically, this type of bankruptcy will wipe out most financial obligations of the debtor. However, those financial obligations do not include the following:

– Student loans
– Restitution, court fees or taxes owed to the government
– Alimony or child support
– Payments owed for an injury or death that was caused by a charge for DUI
– Condo fees or homeowners association fees that were accumulated after a person filed for Chapter 7

Options for Creditors Regarding Bankruptcy And Consent Judgments

If the debt of a creditor is discharged, they may not believe that it can be done. In these type of cases, a creditor has the ability to file an objection. When an objection is filed, a judge will need to determine if a debt is dischargeable or not. Examples of nondischargeable debts include the following:

– Goods, services or money that was obtained by fraud
– Any injury that was caused by committing a criminal offense
– A fraud that was committed by a guardian or trustee

Consent Judgments And Laws Governing Release

Bankruptcy laws will vary from state to state. A bankruptcy law must be cited to determine if a consent judgment can be wiped out via a bankruptcy. If state laws and federal bankruptcy laws disagree, the federal bankruptcy law will have precedence over the state law.

Consulting A Bankruptcy Attorney

If you decide to file bankruptcy so that you can avoid debt that also includes a consent judgment, it may be wise to consult with a lawyer who specializes in bankruptcy. A professional attorney who has studied bankruptcy laws will be able to represent your interests at the bankruptcy hearing.