Why do judgments still appear on my credit report even after I’ve filed for bankruptcy?

Clearing Bankruptcy Judgments on a Credit Report

Many bankruptcy clients wonder why civil judgments (for credit card debt and other types of debt) still appear on their credit reports even after they have filed for bankruptcy and received a discharge order discharging the underlying debt.

If you have filed for Chapter 7 bankruptcy and successfully received a discharge order, or if you have completed your Chapter 13 payment plan and received a discharge order, this means that any “dischargeable” debt that you incurred before the filing your bankruptcy case is now discharged and you do not owe those creditors for those debts anymore. Debts incurred before filing are called “pre-filing debts” and many types of pre-filing debt are dischargeable in bankruptcy. There are also several types of debt that are “non-dischargeable”, so you should consult with your attorney about what types of debts you might still owe after your bankruptcy.

But let’s say, for example, that you have a pre-filing debt with a credit card company and your attorney has advised you that this debt was discharged in your Chapter 7 or Chapter 13 bankruptcy and you don’t owe it anymore. If that credit card company obtained a judgment against you in district court prior to the filing of your bankruptcy, that civil judgment will likely still appear on your credit report even after the underlying debt is discharged in your bankruptcy. The debt is discharged: you don’t owe it, and the creditor is prohibited from trying to collect it from you. But neither the creditor nor the district court is obligated to remove the judgment. If you want the judgment removed from your credit report, you will have to take additional steps to get the judgment “vacated”. At that point, the credit reporting agencies will remove it from your credit report.

Why would you want to do this? If you are applying for a mortgage loan or other type of credit post-bankruptcy, some loan officers will be savvy enough to realize that the judgment was for a pre-filing debt that was discharged in your bankruptcy, and they will understand that it doesn’t affect your loan application. But some loan officers will see this judgment on your credit report and not understand – or refuse to take your word for it – that the underlying debt was discharged. In this case, you may want to take steps to have the judgment vacated.

Here is the process for getting a judgment vacated in Minnesota:

1. Fill out the district court application form.
2. Have another other adult mail a copy of your completed application to your judgment creditor by certified mail. (You can’t serve it because you are a party to this matter.) After that other adult serves the application for you, he or she will need to fill out an affidavit of service (https://view.officeapps.live.com/op/view.aspx?src=http%3A%2F%2Fwww.mncourts.gov%2Fdocuments%2F2%2FPublic%2FCivil%2FAffidavit_of_Service_by_Mail_Bankruptcy_Discharge.doc) and have that affidavit notarized.
3. Obtain a certified copy of your bankruptcy discharge order. Call the bankruptcy court to pay by phone and have them mail it to you, or stop by in person to pick one up. A list of bankruptcy court office locations and phone numbers is on the home page of the bankruptcy court website here: https://www.mnb.uscourts.gov/. The fee for a certified copy of your discharge order is $11.50 (as of August 2020).
4. Once you have the certified copy and the notarized affidavit of service in hand, you will need to file the following items with the district court where your judgment was filed. You can obtain the mailing address for your district court here: https://www.mncourts.gov/Find-Courts.aspx
a. Your original application;
b. The original, notarized affidavit of service;
c. A filing fee of $5.00 (as of August 2020);
d. The certified copy of your discharge

Conclusion

As always, please consult with your attorney with any questions. This blog is not meant as legal advice, but rather general information about the process for vacating a judgment in Minnesota.