If a judgement is obtained against 2 parties, one of whom goes bankrupt but the other party does not, is the judgment against the other party still valid?
Question Details:
My attorney obtained a default judgment against a two debtors, one was an individual and the other was a corporation back in mid 2008. While in the process of getting a court judgment, the corporate debtor went into Chapter 11 bankruptcy. The BK was filed prior to the judges approval of this court judgment. My lawyer was informed of the BK by the trustees. I realize the corporate portion of this court judgment is not good but is the individual part good? Could the court judgment/abstract be considered no good entirely making the individual judgment no good?
The entire judgment is probably not good. The filing of the bankruptcy imposed an automatic stay on the entire proceeding in state court. Your attorney was in contempt of the Bankruptcy Court by proceeding with the judgment after notice of the bankruptcy filing. You don't mention the timing of all this, particularly how long ago it all happened. If the bankruptcy is still pending you have two options. 1. Dismiss the corporation from the state case and get a new judgment against the individual, or 2. file a removal of the state case to the bankruptcy court and proceed with an "adversarial proceeding" in the Bankruptcy Court. Adversarial proceeding is just a fancy name for having a trial on the state court case, but in the Bankruptcy Court, to determine if you are entitled to be a judgment creditor in the bankruptcy. This is rarely worth the money and trouble unless the bankrupt entity has substantial assets or is trying to reorganize rather than just liquidate. If the bankruptcy has already been discharged, then you only have option 1.

I am a lawyer in CT and practice in this area of the law. A judgment that is not discharged in bankrupcty is valid. if you got a judgment against two people where they were both equally liable to you (i.e. if the individual signed a personal guarantee for the corporation's debt), then it does not matter that one debtor is BK. You may still pursue the individual for the full amount of the judgment. I suggest placing a lien on the individual's house or garnishing his bank account.

Are you a lawyer?
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