Definition of a Consent Judgment
A consent judgment is issued when two parties agree to a settlement to end a lawsuit. The parties write up an agreement for the judge to sign. Consent judgments considered here are those between a debtor and creditor. Creditors can agree to settle for less than the full amount they are owed. The debtor makes arrangements to pay on the settled amount. Once this consent judgment is signed by all parties and approved by the judge, any court proceedings are brought to an end.
Consent Judgments that Cannot be Discharged in Bankruptcy
Certain types of judgments will not be discharged in a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is when all of a debtor's financial obligations are forgiven. Examples of debts that cannot be forgiven include:
• Student loans
• Child support or alimony
• Government debts such as taxes, court fees, restitution
• Homeowners association or condo fees accumulated after filing Chapter 7
• Payments for injury or death caused by a DUI charge.
Creditor Options Regarding Consent Judgments and Bankruptcy
If a creditor does not believe their debt is dischargeable, the creditor can file an objection. Making an objection involves filing an adversary charge in bankruptcy court. A judge may agree that certain debts are not dischargeable. Examples of non-dischargeable debt include payments on:
• Money, services, or goods obtained by fraud
• Injury caused by a criminal offense such as assault
• Fraud committed by a trustee or guardian.
Laws Governing Release of a Consent Judgment
Bankruptcy laws vary by state. These bankruptcy laws dictate whether a consent judgment can be eliminated through bankruptcy. Federal bankruptcy law trumps state law if the two bodies of law disagree.
If you are considering filing bankruptcy to avoid debt including a consent judgment, it is advisable to consult an attorney. Bankruptcy attorneys know all of the applicable bankruptcy laws. They will represent you at the hearing to release you from all the debt that is legally possible.
In order for the bankruptcy attorney to represent you to the best of his or her ability, you must be honest with the attorney regarding assets and debts. Provide as much documentation as possible so that the attorney is prepared at your bankruptcy hearing.