What Happens to a Judgement if You File for Bankruptcy?

Navigating the Maze: Understanding Bankruptcy and Court Judgements in Canada

Dealing with financial challenges can be fraught with complexity. One of the most daunting aspects is understanding the intersection between bankruptcy and court judgements. This article explores what happens when you’re faced with a judgement and the implications of filing for bankruptcy.


When battling financial woes, it’s crucial to understand the various facets involved, notably the correlation between bankruptcy and court judgements. This article aims to shed light on this intricate subject, making it easier for you to navigate these murky waters.

Understanding Bankruptcy

Bankruptcy is a legal status where an individual or entity cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. It’s a process that offers individuals or businesses a fresh start by eliminating most of their debts.

The Role of Court Judgements

A court judgement is a decision made by a court following a lawsuit. When it comes to debts, a judgement is typically the result of a creditor suing a debtor and winning the case. The court then issues an order that mandates the debtor to pay the money owed.

The Intersection

Now, what happens when the paths of bankruptcy and court judgements cross? Essentially, when you file for bankruptcy, most judgements against you are wiped out. That’s because bankruptcy is designed to give debtors a fresh financial start.

Effects of Bankruptcy on Judgements

When you file for bankruptcy, it creates an automatic stay. This stay prevents most creditors from continuing with collection activities, including enforcing court judgements. Therefore, in most cases, a bankruptcy filing will effectively nullify the judgement, releasing you from the obligation to pay it.

Exceptions to the Rule

However, not all judgements can be discharged through bankruptcy. For instance, judgements related to child or spousal support, or those resulting from criminal acts, cannot be eliminated. It’s important to consult with a bankruptcy professional to understand the specifics of your situation.

The Aftermath of Bankruptcy

Filing for bankruptcy isn’t without consequences. It remains on your credit record for a period of six years from your discharge date. After this period, both the bankruptcy and the discharged debt (including the judgement) are removed from your credit history.

The Role of Trustees

In Canada, Licensed Insolvency Trustees play a crucial role in the bankruptcy process. They’re federally regulated professionals who provide advice and services to individuals and businesses with debt problems. Trustees can guide you through the bankruptcy process, help you understand its implications, and explore possible alternatives.

Exploring Alternatives

Bankruptcy should always be the last resort. Alternatives like consumer proposals could be a better choice depending on your circumstances. A consumer proposal is a legal agreement set up by a licensed insolvency trustee. The trustee creates a proposal for your creditors where you agree to pay a percentage of what you owe, extend the time you have to pay off the debt, or both.


Understanding bankruptcy and court judgements is vital when dealing with financial distress. The process can be complex and intimidating, but with the right knowledge and guidance, you can navigate the system and make the best decision for your financial future.

Remember, it’s always best to consult with a professional if you’re considering bankruptcy or trying to understand the implications of a court judgement. They can provide valuable advice tailored to your unique situation.

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