Discharging Debts Involving Willful Injury
One of the main purposes of bankruptcy is to provide a second chance and a fresh start to deserving people. This is generally accomplished by discharging of debts that the debtor cannot afford to pay. However, sometimes the benefit of the discharge is outweighed by other considerations. In these cases the debt may be found not dischargeable in bankruptcy.
When the debtor has committed a willful and malicious injury to another person, the Bankruptcy Code does not allow the discharge of a debt associated with the injury. These injuries are known as "intentional torts," and include personal injury lawsuits where the debtor acted intentionally as opposed to negligently or recklessly. 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 dischargeable.
Willful damage to property is also excepted from a Chapter 7 discharge, but is dischargeable in a Chapter 13 bankruptcy case. Certain injuries caused by operating a vehicle under the influence of alcohol are also non-dischargeable. In order for the debt to be excepted from the bankruptcy discharge, the injured party must file an "adversary proceeding" within 60 days after your first scheduled meeting of creditors under section 341. If the adversary case is not filed within that period, the debt is included in the discharge. 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, speak with an experienced bankruptcy attorney and discuss your options. 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 also shield your assets and wages for a time while you repay what you can afford.