THE “WILLFUL AND MALICIOUS” INJURY EXCEPTION TO DISCHARGE IN BANKRUPTCY
Unexpected circumstances and overwhelming debt can happen to almost anyone. For many individuals struggling with insurmountable debt, the only chance that they have to ever get out of debt is to seek out a fresh start through filing bankruptcy. The purpose of declaring bankruptcy is to provide a debtor with a fresh start. Filing bankruptcy allows the debtor to begin with a clean debt slate. As great of a concept as this may seem, there are some cases where it would be unfair to allow a debtor to have a particular debt discharged. The Bankruptcy Code prohibits discharge of such debts, as any Mesa AZ bankruptcy attorney can tell you. One example of such a debt that is unable to be dis-charged through bankruptcy is the willful and malicious injury exception.
The willful and malicious injury exception is when the debtor has committed a willful and malicious injury to another person. That debt associated with the injury is not allowed to be dis-charged in bankruptcy. The Bankruptcy Code in section 523(a)(6) provides that an individual debtor may not discharge a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.” These injuries are known as “intentional torts,” and include personal injury lawsuits where the debtor acted intentionally as opposed to negligently or recklessly.
For the longest time the United States Supreme Court interpreted the willful and malicious injury exception very broadly. From 1904 until 1998, to except a debt from discharge under the exception, one only needed to prove that the debtor’s act was intentional and necessarily caused injury. The existence of malice was assumed from the fact that an intentional act caused the injury. The 1998 U.S. Supreme Court case of Kawaahuau v. Geiger stated that for bankruptcy purposes, the term “willful” refers to the injury rather than to the act. The debtor must act with the willful intent to cause the injury, rather than willfully acting that results in an injury. If the debtor did not act willfully to cause an injury, the debt is dis-chargeable.
A bankruptcy discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. However in a chapter 7 bankruptcy there are many exceptions to the discharge. One of those exceptions is the Willful damage to property. The Willful damage to property is dis-chargeable in a Chapter 13 bankruptcy case.
There are other circumstances where a Willful damage is not dis-chargable, certain injuries caused by operating a vehicle under the influence of alcohol are non-dis-chargeable. In order for the debt to be exempted from the bankruptcy discharge, the injured party must file an “adversary proceeding” within 60 days of your 341 hearing (Meeting of the Creditors). If the adversary case is not filed by the injured party within that time period the debt is then included in the bankruptcy and will be discharged. If the adversary proceeding is filed properly and on-time, the bankruptcy judge will conduct a hearing to determine if the injury was caused willfully.
If you have committed an intentional tort and cannot afford to pay the debt, you will need to weigh your options available to you. Consulting with a debt relief expert may help you completely explore all of the debt relief options that are available to you. You have debt, there are options for relief. In some cases bankruptcy can discharge the debt, or can provide you time to pay the debt under court supervision over three to five years. Bankruptcy can be a handy debt relief tool as it shields your assets and wages for a time while you repay what you can afford. Make sure to carefully weigh all of your options before making you debt relief decision
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