- October 15, 2023
- Thomas Adam
If you are in debt, creditors can take legal action against you to recover what you owe. If they file a lawsuit and obtain a judgment against you, they can then take action to enforce that judgment and seize any non-exempt property. In this capacity, if you fail to respond to the lawsuit(s) filed against you by the creditor(s), the court can enter into a default judgment or a money judgment for the amount owed plus other costs, and this can absolutely affect your credit score.
If this occurs, the creditor serves what’s known as a Notice of Right to Claim exemption. During this time, any property and assets classified as non-exempt (such as a second car or residential property) are vulnerable to being seized as part of the judgment. This can also involve a lien on real property and a forced sale of non-exempt assets to satisfy the debt. However, if this occurs, you have options through the bankruptcy process, and our Jacksonville, Florida bankruptcy attorneys can help.
You have the ability to fight a default judgment against those creditors in a number of ways, such as working with an experienced attorney to:
- File for bankruptcy, which can allow you to potentially discharge certain debts and provide relief from collection activities
- File a motion to request that the court vacate or set aside the judgment if, for example, there was a legitimate reason you could not respond and/or you were not properly served. In Florida, a party attempting to set aside a default must demonstrate excusable neglect, a meritorious defense, and due diligence in order to be successful in court
- Negotiate a settlement with the creditors
However, if you are concerned about being able to hold onto your property and assets, it is ideal to get out ahead of debt owed to creditors by pursuing bankruptcy before credits have a chance of obtaining a default judgment against you.
The Issue of Dischargeability
There are cases in which when plaintiffs file for Chapter 7 bankruptcy protection, creditors file an adversary proceeding seeking to have the debt created by the default judgment declared non-dischargeable under the law. The ultimate issue of dischargeability is a legal question that must be addressed by the bankruptcy court. As such, the statutory provisions of the bankruptcy code governing non-dischargeability reflect a congressional decision to exclude from the general policy of discharging certain categories of debt on the basis that some categories of debt outweigh the debtor’s interest in a completely fresh start. For example, one such category involves debt that is linked to fraud, whereby any false pretense and/or false representation involving an intentional wrong – where the fraud is knowingly made – will lead to the court refusing to discharge any and all liability arising from the fraud.
Contact Our Jacksonville, Florida Bankruptcy Law Practice for Assistance
If you live in Jacksonville, Florida or any surrounding areas of Florida, and you have questions about bankruptcy or need assistance with the process and/or any related options, we are here to help: Contact us today to schedule a free consultation and find out more.