Eastern District of Virginia Bankruptcy Court Holds that Failure to note Bankruptcy Discharge Effect on Judgment violated Discharge Injunction.

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Even though the case was decided in Virginia, its principle can be applied to bankruptcies throughout the country

Cary, North Carolina (PRWEB) June 30, 2012

Eastern District of Virginia Bankruptcy Court finds creditor violates discharge injunction for failure to take action and note on docketed judgment that the underlying debt had been discharged in bankruptcy. In the case In re: Jennifer V-E Johnson, Case No. 10-12535-RGM in the Bankruptcy Court for the Eastern District of Virginia. The debtor sought relief from the bankruptcy court requiring a judgment creditor to note on recorded judgment that the obligation had been discharged in bankruptcy.

The basic premise of the case is that a creditor had obtained a judgment against a debtor and had it docketed in the Clerk’s Office. Debtor sought and received relief from her debts through bankruptcy, the underlying debt that was the subject of the judgment being one of those debts. The case was brought to force the creditor to take affirmative action to note that the judgment was discharged in bankruptcy, because the underlying debt was discharged.

The court held that to “A creditor’s responsibility to mark a docketed judgment as ‘discharged in bankruptcy’ arises independently under both the Code of Virginia and the Bankruptcy Code.” Meaning that a creditor must take affirmative action to have a judgment noted discharged so that it does not cause public confusion regarding the nature and continued enforcement of the judgment. The Court held that failure to take any action to alleviate public confusion was tantamount to action to collect a discharged debt.

Interviewed recently regarding the principles identified in the judgment, Mr. Sargent stated, "Even though the case was decided in Virginia, its principle can be applied to bankruptcies throughout the country." As creditor reporting and bankruptcy discharge regulations are refined, additional states will undoubtedly use this judgment in applying rules. We stay abreast of the latest court findings regarding the area of bankruptcy law, so that bankruptcy applicants do not have to wade through laws and regulations."

Depending on the jurisdictions, docketed judgments can last many, many years. Without some sort of direction, a debtor who has received a discharge in bankruptcy and is attempting to obtain a “fresh start” as contemplated by the bankruptcy code, can face additional hurdles when trying to re-establish credit because of a creditor who left a judgment open after discharge. Because credit bureaus and title searchers look at judgment records when doing a background check or title search for the purchase of real estate, an open judgment can prevent a consumer from obtaining credit or having to pay more for that credit.

The bottom line is that if a consumer has received a discharge in bankruptcy, that they should be given every opportunity to re-establish themselves, receive their “fresh start” and be a productive member of the community.

About The Law Office of Dennis Jay Sargent Jr, PLLC
The Law Office of Dennis Jay Sargent Jr, PLLC is a Cary / Raleigh based law practice primarily focusing on Chapter 7 & Chapter 13 bankruptcy. Their goal is to provide individuals and families the peace of mind when dealing with stressful and difficult decisions regarding their home and property. They strive to put the client first, helping to guide them down the legal process path. Caring and compassion is the cornerstone for which they base their practice on. Free initial consultations are available as well as evenings and some weekends when needed. Contact them at http://www.SargentLawNC.com or call 919-654-4545 for more information.

The Law Office of Dennis Jay Sargent Jr, PLLC is a debt relief agency, helping people in the Raleigh metro area file for Chapter 7 or Chapter 13 bankruptcy relief under the United States Bankruptcy Code. They are a proud member of the National Association of Consumer Bankruptcy Attorneys and the American Bankruptcy Institute.

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