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Creditor Rights and Protecting Judgment Debt in Bankruptcy

This is syndicated content that was originally published on AVVO.com by Attorney Michael J. Wambolt of Sader Law Firm. For creditors holding large judgments against individual debtors with substantial disposable income, there is always the risk that debtor will pursue a Chapter 7 Bankruptcy as a means to avoid payment. 1. Creditors May File a Motion to Convert a Debtor’s Case from a Chapter 7 to a Chapter 11 Bankruptcy If a creditor’s judgment is based on a simple breach of contract or guaranty claim, it is unlikely the judgment debt can be excepted from discharge under Section 523 of the Bankruptcy Code. In addition, dismissal or conversion of a debtor’s case may not be an option under Section 707 of the Code if the debtor’s debts are primarily business as opposed to consumer in nature. Fortunately, Section 706(b) of the Code allows creditors to file a motion to convert…
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