Legal Question in Bankruptcy in Texas
I have a judgement filed against me for a car that I returned to the dealership 3 yrs ago due to a job loss. The balance owed at the time was $9,000. It has probably doubled since then and I keep getting served. I have never accepted the paperwork from the men coming to my door. Is it too late to negotiate a signifigantly reduced payback lump sum? Maybe 10%? I own my home and want to sell early 2010. As it is now...they will get all of my equity that I need for my new home. Should I file bankrupcy??
2 Answers from Attorneys
What it depends on is whether they have filed an "Abstract of Judgment" in the county deed records for where you live.
If they have not done that, then the debt you owe them would not have an effect on selling your house. But I would be extremely surprised if they had not already filed and Abstract. It's just such a very simple thing that is done in every case, so I can't imagine that they've skipped it in your situation. You can check to see by looking it up with the County Clerk's office.
If they filed an Abstract, then it would mess up your sale. The Abstract would be a lien that has to be taken care of at the closing table when you sell. If it is your homestead, it is possible to get it taken care of for slightly less than the full balance if you and your attorney are prepared to go to war over it.
But the path of least resistance, as you point out, is to just file a bankruptcy. In a chapter 7, you can wipe out all your unsecured debts. You can file a "Motion to Avoid Judicial Lien" that, if granted, wipes out their lien and the Abstract of Judgment. When you later sell the house, you don't have to pay them any of the money.
I've simplified the process in this answer, but hopefully you get the idea.
Dallas Bankruptcy Lawyer
Under the new bankruptcy law, not everyone is eligible to file a chapter 7 bankruptcy. There is a means test under the statute. There are websites that have sample tests that can give you an idea of where you stand.
If you are not eligible for chapter 7, you will have to file under chapter 13 which would require paying off all or a portion of certain debts.
My suggestion is that you offer to pay off the debt for an amount less than the cost of filing a bankruptcy. If they accept then everyone will be ahead. If they refuse, hire a bankruptcy lawyer. However, before you file, have your attorney make the same offer, so your creditors will know that you are serious and that they could end up with nothing..
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