Does interest accrue on a judgment when debtor defaults on bankruptcy agreement?
Full Question:
Answer:
Any default under a bankruptcy agreement would be handled by the bankruptcy court and the trustee appointed. If you obtained a judgment against a debtor prior to the debtor's petition for bankruptcy, the judgment may accrue interest.
Colorado statutues provide that rate of interest on a judgment to be: 8% per annum if no rate is specified, or the rate specified in a contract or instrument in writing, from the date of entry of judgment until full satisfaction thereof. (C.R.S. 5-12-102(4).)
The judgment debt would be dealt with in the bankruptcy court and may end up discharged.
A Trustee in Bankruptcy is a person appointed by the United States Department of Justice or by the creditors involved in a bankruptcy case. Under Chapter 7 of the Bankruptcy Code, the trustee duties are gathering the debtor’s non-exempt property, managing the funds from the sale of those assets, paying expenses and distributing the balance to the owed creditors.
The trustee is responsible for receiving the debtor’s monthly payments and proportionally distributing those funds to the bankrupt’s creditors. The Bankruptcy Trustee acts on behalf of the debtor to guarantee that both the creditors’ and the debtor’s interests are maintained in accordance with the bankruptcy laws. The trustee in bankruptcy is often required to act as a negotiator between the two parties.
The only place where you would find something in writing regarding your particular situation is the file for this debtor's bankruptcy. There should be language in the settlement agreement regarding default by the debtor. If not, you may have to petition the court and/or trustee for clarification.
