Judgments and Bankruptcy in Phoenix

Yes -- in most cases. A money judgment is simply a court order saying you owe a debt. If the underlying debt is dischargeable, the judgment is also discharged. This includes judgments from:

• Credit card lawsuits
• Medical debt collections
• Personal loans and deficiency balances
• Breach of contract claims
• Most other civil money judgments

However, judgments based on non-dischargeable debts survive bankruptcy, including judgments for fraud, willful injury, DUI damages, and domestic support obligations.

Even after discharge, a judgment lien on your property survives unless you take action. Under 11 U.S.C. section 522(f), you can remove (avoid) a judgment lien if it impairs an exemption you would otherwise be entitled to.

• Arizona homestead: $250,000 -- if the judgment lien impairs this exemption, you can file a motion to avoid it
• Personal property: Judgment liens on vehicles, tools, and other exempt personal property can also be avoided
• Timing: File the lien avoidance motion during your bankruptcy case. The court will enter an order removing the lien from your property.
• Recording: After the court grants the motion, record the order with the county recorder to clear the lien from your title.

Before filing bankruptcy, creditors with judgments can use these collection methods in Arizona:

• Wage garnishment: Arizona allows garnishment of up to 25% of disposable earnings, following the federal standard. Bank accounts can also be garnished with certain exemptions for Social Security and other protected funds
• Bank account levy: Creditors can freeze and seize funds in your bank account, subject to certain exemptions
• Property liens: Judgments automatically become liens on real property in the county where they are recorded
• Asset seizure: The sheriff can seize non-exempt personal property to satisfy the judgment

Filing bankruptcy stops all of these collection methods immediately through the automatic stay.