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Judgments and bankruptcy

On Behalf of | May 23, 2019 | Bankruptcy

When individuals living in Texas file for bankruptcy, they typically do so because they need a fresh financial start. While most types of debts can be discharged in bankruptcy, there are a few exceptions. One type of debt that can be nondischargeable is a court judgment.

When one party successfully sues another in court, the judge enters a judgment for the plaintiff. The judgment is typically an amount of money that the defendant now owes the plaintiff. If repaying this debt proves unmanageable for the defendant, he or she may opt to file for bankruptcy.

However, the court system also recognizes that there are some judgments that must be paid regardless of the defendant’s financial situation. This includes judgments based on the fraudulent actions of the debtor.

However, the court can set standards for determining whether the actions of the debtor were fraudulent. In a recent case, the teenage children of a man who died sued the executor of his estate on the grounds that she was mismanaging his assets. Eventually, the executor was replaced and a judgment was entered against the executor.

Unfortunately for the plaintiffs, the executor filed for bankruptcy and asked that the lawsuit judgment be dismissed. Because the plaintiffs had decided to drop claims that the executor had engaged in improper conduct, the bankruptcy court sided with the former executor and discharged the judgment against her.

Cases like this show that debtors who are worried about whether a judgment is dischargeable may benefit from speaking with an experienced bankruptcy attorney. A lawyer might be able to review the circumstances of the original judgment and make suggestions regarding how to proceed with the case.