What Bankruptcy CAN’T Do: Intents and Purposes, Part Six
Willful and Malicious
Bankruptcy helps relieve the burden of credit card and loan debts, medical bills, back utilities and rent, and so forth.
But there are some debts that bankruptcy does not affect; that are “immune” from a bankruptcy discharge – the word is “non-dischargeable”. This means that when the smoke clears and the bankruptcy is over, these debts will still have to be paid.
Previous blogs were about taxes, traffic fines, speeding tickets and their ilk, student loans and Intentional Debt – that is, lying to get a loan – either by preparing a false financial statement or otherwise.
Sometimes people get a loan or cash advance or purchase a luxury item just before filing bankruptcy. The court presumes you bought the item/got the loan with no intention of paying for it.
Two last examples, and these are pretty obvious …
- Debts incurred due to embezzlement or fraud while acting in a fiduciary capacity. If you are in charge of your child’s or parent’s trust account and buy yourself a condo in Bermuda, yep … non-dischargeable.
- Injury to a person or their property while operating a vehicle while intoxicated. At first this law said motor vehicles only. It was changed to add watercraft and other vessels because someone, somewhere, managed to win an argument that a boat was not a motor vehicle (because in bankruptcy – as far as exemptions go – it is not).
Aren’t these willful and malicious anyway? Not necessarily. If you drained a trust account to pay for your gambling addiction; or if you are an alcoholic …
Are addictions and medical conditions enough to rise to the level of willful and malicious? I wouldn’t want to be the judge to decide that. These exceptions to discharge are specific enough to take that out of the consideration.
What if these issues have not been ruled on yet? “I’ve only been accused, no court has said I embezzled that money!” True, but the bankruptcy court can so rule; or take it back to the circuit court for a hearing and ruling. You may have to hire a criminal attorney (if your bankruptcy attorney does not wish to take the case) to help you.
If you were NOT found to have embezzled the funds, or if it were ruled that you were NOT intoxicated, that’s a big plus in your favor. You might still have to defend yourself in other parts of the bankruptcy code that make a debt non-dischargeable, however.
“Intentional Debts” is a large issue with lots of nooks and crannies that an attorney or a creditor can use against you. Obviously you will need to discuss your situation with a good bankruptcy attorney that practices in your area.
Next time I talk about marital debt …
Copyright 2016 Michael Curry
About the author: Michael Curry of Curry Law Office in Mount Vernon, Illinois has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.
He is also the author of books on finance and bankruptcy available on Kindle through Amazon!
Whether you live in Mount Vernon, Salem, Waltonville, Woodlawn, Lawrenceville, Centralia, Louisville, Xenia, Grayville, Effingham, Dieterich, Vandalia, McLeansboro, Dahlgren, Albion, Flora, Clay City, Kinmundy, Chester, Sparta, Olney, Mount Carmel, Nashville, Fairfield, Cisne, Wayne City, Carmi, Grayville, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!
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