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Unsecured debt that has not been paid by a debtor will often go to court in an effort by the creditor to win a judgment. When a creditor wins a judgment against a debtor, that "unsecured debt" becomes "secured debt" and the creditor now has the right to take aggressive collection action against the debtor. With a judgment a creditor can garnish bank accounts, wages and place a lien on real estate or other property owned by the debtor making it impossible for the debtor to sell the property without paying the debt first. When a debtor files for Chapter 13 bankruptcy, the creditor with a judgment will file a secured claim with the bankruptcy court. Most times, in a chapter 13 bankruptcy, secured claims are paid first and in full, before any unsecured creditors.
If a creditor has won a judgment against you in court and/or has placed a lien against your wages, bank account or property, speak with a bankruptcy attorney immediately. The bankruptcy attorney may be able to file a motion to have the lien removed, especially if it is encumbering your ability to pay for basic expenses such as food, shelter and utilities.
May 14th, 2009 at 1:27 am
I’ve been in a chapter 13 bankruptcy and know that it is ALL ABOUT THE LAWYERS! For me, it was easier to quit my chapter 13 because all of my debts were with unsecured creditors, I didn’t own any property or have any bank accounts to seize,no car payments…. so I was garnished at 25% of my income over 60 times the Federal minimum wage, leaving me with far more money to live on month to month than the stupid ass BK 13 that you all want people to waste money on! Hell, I’m goning to convert to a chapter 7 soon, so my garnishment will be gone! Hallelujia!