I live in new york; can I file for bankruptcy once a default judgement is made against me? There is no way I can pay the amount they are asking.

Usually one decides to do this once the debt gets entirely out of hand, not after a judgement occurs. It makes it difficult but can be done.

Yes. In some states, the problem with judgements is that they constitute a lien against all of your personal and real property. The bankruptcy code provides for lien avoidance to the extent that the lien impairs any of your exempt property. Your attorney can advise you further.