A civil judgment is a decision of a court or judge stating an individual or business owes debts to a creditor. Before a judgment can be entered, the debtor is served with a summons and complaint by the creditor and given 20 days to file an answer to the complaint. If no answer is filed, the creditor can move forward with filing an application with the court asking for a default judgment.
Once a civil judgment is entered in Minnesota, it is valid for 10 years. A creditor can renew a judgment for another 10 years; however, a new lawsuit must be started before the expiration of the 10-year period.
Pursuant to Minnesota Statute 548.09, a civil judgment creates a lien on the debtor’s land or personal property. A judgment lien affects the debtor’s title on the land or residence. After a judgment lien, the debtor will commonly have to pay off the judgment in full when their residence is sold or refinanced. The good news is after filing for bankruptcy and receiving a bankruptcy discharge, that lien can be removed in Minnesota District Court on the debtor’s exempt assets, such as their homestead.
In addition to the possibility of a lien being placed on your assets, the creditor can take money from your paycheck before you are paid. There are limitations to wage garnishments in Minnesota:
The filing of a bankruptcy will immediately stop current and future wage garnishments.
Another method of collecting on civil judgments is through bank account levies. Bank levies are commonly performed by the creditor’s attorney, however there is a $10,000 limit on attorney levies. Certain assets are exempt from levy including food support, veteran’s benefits, social security benefits, and 75% of the debtor’s wages. It is not unusual for the creditor to levy ALL bank accounts with the debtor’s name on the account. This includes accounts of non-debtors such as spouses, parents, and even minor children.
After a levy, the debtor is given an opportunity to declare exempt funds. An exemption notice will be mailed to the debtor shortly after their accounts have been levied and returned to the creditor within 14 days. Exempt funds are released to the debtor once the exemption is recognized. In certain cases the creditor might request an exemption hearing before the judge prior to returning the exempt assets. It is important to note that it is possible in certain bankruptcy cases after filing to recover garnished wages or bank account levies of $600.00 or more taken within 90 days prior to filing for bankruptcy.
There are certain debts that a Chapter 7 Bankruptcy does not allow you to discharge. Some of these debts include:
1. Recent taxes2. Student loan debt3. Child support obligations4. Spousal support obligations5. Debts not listed in the Chapter 7 Petition6. Credit that was obtained from fraud7. Debts with co-debtors – your co-signer will be liable for the full amount of the debt unless they also file bankruptcy
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