Types of Bankruptcy

The two primary forms or individual bankruptcy protection are Chapter 7 and Chapter 13. Under Chapter 7, you will face a liquidation of assets to pay off debts. Under Chapter 13 bankruptcy, also known as "reorganization," you can submit a payment plan to your lenders for approval.

Significance

Judgments are not typically removed in a bankruptcy filing, though they may be settled for less than is actually owed.

Effect of Judgments

Judgments against you are recorded on your credit report. They can hinder your ability to gain a loan in the future. If your assets are not sufficient to cover your judgments, your wages may be garnished until the debts are paid.

Removing Judgments

The primary ways to remove judgments are to prove they are not valid or have them forgiven. Proving a debt is not valid means showing it was illegally obtained or the contract is void due to a lender's missteps. Debts are typically forgiven only if you have met criteria set by the lender and forgiveness will save the lender money.

Alternatives

It is better to settle a debt prior to bankruptcy than attempt to remove a judgment later. Consider modifying loans, refinancing loans or settling loans as means of stopping a judgment before it occurs.

Source:

U.S. Courts: bankruptcy basics

Federal Trade Commission: How to dispute credit report errors