Debtor Must List Creditor On Bankruptcy Petition To Cancel Judgment

If the debtor fails to list a creditor on the bankruptcy petition, the creditor's judgment may not be extinguished unless there is proof the creditor had notice for at least one year and failed to act. The notice requirement permits creditors the opportunity to protect their interests and is a requirement of N.J.S.A. 2A:16-49.1. The statute is designed to prevent judgments discharged by bankruptcy from remaining clouding title. In the event the judgment is a lien on real property the issue of whether the judgment was actually dischargeable in bankruptcy. Dischargeability is affected by the timing of the creditor's levying on the property. In the event a creditor has levied on real property pre-petition, the judgment survives the bankruptcy and is not cancellable. It is critical to remember, the debtor is released through bankruptcy as to personal liability but the debtor's real property is not. Debtors, therefore, may utilize this statutory remedy after waiting one year form their discharge in bankruptcy. However, unless the creditor had notice and failed to avail itself of the right to levy the debtor may not utilize the statutory provision permitting cancellation of the judgment. If you are considering bankruptcy you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.