To have a judgment set a side, you must file a motion with the court to set aside the judgment. You must also explain why you didn’t respond to the lawsuit. You generally have 2 years to do this. (See KSA 60-255; KSA 60-260; KSA 60-309) There are a couple grounds why a judgment can be set aside – failure to provide accurate notice and mistake by the court. The most common reason is that you moved and never received a copy of the lawsuit. If the court approves your motion, the judgment is vacated and you then get to contest or litigate the case.
In terms of leverage, you have a lot more options in terms of how to resolve the case when you are able to contest the case. This means you may be able to settle the case and get a better deal versus trying to settle a judgment that has already been entered. It’s possible if you have legitimate defenses you may even be able to win the case and not pay a dime. Either way, the judgment creditor no longer has the ability to levy your bank accounts, garnish your wages, or lien your property.
There are a couple ways to satisfy a judgment. The first way is to pay the balance owed in full and the creditor will file a “Satisfaction of Judgment” with the court. This can happen voluntarily or involuntarily – such as through a garnishment or bank levy. The second way to satisfy a judgment is to enter into an agreement to settle the judgment for less than the full balance. Judgment creditors routinely settle judgments for less than the full balance. There are many reasons for this, but mainly it comes down to the fact the creditor gets money now instead of some uncertain future date.
The biggest problem with negotiating a debt settlement is that you need cold hard cash up front. Many folks simply do not have the money to settle a $5,000 credit card debt for $3,000 cash. If you do settle a debt for less than the full balance, be prepared to receive a 1099 for the written off balance as untaxed “income” and expect to owe the IRS some money.
If you do not have the money to hire a lawyer to file motions to set a judgment aside or the money to settle a debt, then your best option may be to discharge the judgment in bankruptcy. Not all judgments can be discharged in bankruptcy. A primary example are judgments based upon fraud – like over-payment of unemployment insurance or theft by deception (think embezzlement).
If you are wondering can bankruptcy get rid of a lawsuit judgment – the answers is probably yes. You must qualify for bankruptcy and the underlying cause of the judgment must not be based upon fraud or other non-dischargeable reason. If you qualify for bankruptcy and otherwise feel that bankruptcy is right for you, you should consult a bankruptcy attorney right away. Filing a bankruptcy petition will place an automatic stay on the judgment and any enforcement actions.
Can Bankruptcy Get Rid of a Lawsuit Judgment? If you have questions about how to get rid of a judgment in bankruptcy, please give us a call at for a FREE Consultation over the phone or in person or you can email us now.