I understand that BK does not discharge a judgment... but if the process to get a judgment has been initiated (i.e., filing and service, but no hearing yet), can the debtor be excused from the obligation? If more details are needed: (1) Renter owes back rent (and agrees it is owed); (2) Suspect renter may be considering BK; (3) If small claims case is initiated to establish the renter is legally obligated to pay back rent, would a subsequent BK by renter exclude the back rent obligation? And is there a critical issue of timing or sequence?
5 Answers from Attorneys
You understand wrong. Bankruptcy does indeed discharge a judgment. If you are in a landlord and tenant dispute it won't stop a wrongful detainer for possession of the premises for non payment, but the landlord won't be able to collect the money from you because of the bankruptcy. Call me for advice.
Back rent due is dischargeable in BK. The Bk filing will stop the process at whatever stage it's at. So if a suit for rent is filed but a judgment has not been entered, the suit stops there and a judgment will not be entered. If a judgment is entered prior to the BK being filed, the obligation to pay the judgment will be discharged in the BK. So, bottom line, judgment or no judgment, the obligation to pay that back rent will be discharged. Sorry!
Your understanding in INCORRECT. People use bankruptcy to discharge judgments all the time. What debtors sometime get confused is that judgment liens are not automatically removed in bankruptcy and additional steps may be necessary to make this happen.
It does not matter what stage the litigation is when the debtor files for bankruptcy. Unless the creditor files a timely lawsuit in bankruptcy court to allege fraud or some other grounds for the denial of a discharge for the claim, and claim for unpaid rent would be wipe out if the debtor received a discharge. If there is a judgment for unpaid rent, it would be discharged.
I agree with my colleagues. Being a secured party or a party with non dischargeable debt is the only way to protect yourself from bk.
As previously stated, bankruptcy does discharge a judgment unless a fraud count is pleaded and proved. Bankruptcy Code 11 U.S.C. Exceptions to discharge:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt - -
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by - (A) false pretenses, a false representation, or actual fraud,
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