Bankruptcy: Dischargeability of Debts - Reliance on Financial Statement

     In the case of Paterno Imports Ltd. v. McBee, Judge Tice of the United States Bankruptcy Court, Eastern District of Virginia, sitting in Richmond, held that a plaintiff/creditor, a wine import company who had obtained a judgment against the debtor and his business, failed to prove that it required or relied on the alleged material misrepresentations in a financial statement provided to the debtor company. Accordingly, the judgment the import company ultimately obtained against the debtor and his business was not exempt from discharge. 

     The Court ruled that the case hinged upon the events surrounding a meeting between the debtor, the debtor's counsel, the plaintiff and the bank official. Each party presented evidence in diametric opposition to the other party's claims. The oral testimony presented by the parties at trial was, in its most important aspect, conflicting and irreconcilable. 

     The Court pointed out that in a dischargeability case, the burden of proof is on the plaintiff. The Court found that the plaintiff failed in its burden. Despite the fact that the plaintiff's counsel prepared extensive documentation which the debtor was required to sign both personally and for his company, the debtor's guaranty did not mention a financial statement, and no other writing presented at trial suggested that the guaranty was conditioned upon the plaintiff's approval or acceptance of the debtor's financial statement. 

     In summary, the Court found that the plaintiff failed to establish (1) that the plaintiff and the debtor entered into an agreement under which the plaintiff would forbear from pursuing further collection efforts against the debtor's business and give it time to resolve its financial difficulties, in exchange for the debtor's personal guaranty of the company's debt to the plaintiff; (2) that any transaction between the plaintiff and the debtor was conditioned upon the plaintiff's acceptance or approval of the debtor's personal financial statement; or (3) that at the meeting of the parties the debtor produced a personal financial statement or that there was any discussion of such a statement. The Court stated that these findings required the Court to conclude that the plaintiff did not rely upon the debtor's personal financial statement or any other statement. Therefore, the debt was discharged.

Bankruptcy: Dischargeability of Debts - Company Funded & Controlled by Wife

     In the case of Old National Bank v. Reedy, Judge Tice of the United States Bankruptcy Court, Eastern District of Virginia, denied a complaint against dischargeability. In Reedy the debtor, a consultant on obtaining government contracts, had financial difficulties in his prior business operations. One year before he filed for bankruptcy, the debtor’s wife agreed to assist him from her own financial resources by capitalizing and operating a company in which she was the sole shareholder and through which husband could perform his consulting work. The creditor bank had argued that the establishment and operation of this business was a transfer with intent to defraud creditors. 

     The Court held that the case was devoid of any direct testimony by the debtor concerning specific intent to delay, hinder or defraud his creditors. Instead, there was credible evidence regarding the legitimate business purpose of setting up and operating the corporation in its present form. 

     In Reedy the debtor's wife completely capitalized the business and maintained the books and records while the debtor performed consulting services. Such control was a condition to the debtor's wife's capital contribution. Moreover, the debtor's wife initiated the incorporation of the business and had been the only stockholder since its inception. No transfer of stock ever occurred. 

     In summary, the Court denied the creditor's request for two reasons. First, there was no transfer of property by the debtor. Although the debtor had earned some consulting commissions, there was no evidence that he had an established business or that he transferred a business to the corporation. He merely went to work for and rendered services to a new employer. There was no basis in the trial record for the Court to ignore the business as a separate and independent entity. The business's receipts of consulting income did not constitute transfers by the debtor. Second, there was no intent by the debtor to hinder or delay his creditors. The formation of the business by the wife almost a full year before the debtor filed bankruptcy served a legitimate business purpose of enabling the debtor's wife to assist him in dealing with his financial problems. The Court found that the new arrangement removed the debtors' ability to make imprudent financial decisions and gave wife the reassurance she needed if she was to assist him from her own independent financial resources.

Bankruptcy: Dischargeability of Debts - Piercing the Corporate Veil

     In the case of Hodnett v. Loevner, Judge Tice of the United States Bankruptcy Court, Eastern District of Virginia held that a bankruptcy debtor is not insulated from the dischargeability issues raised under Bankruptcy Code §523 (a)(4) by virtue of the fact that the transactions were done in the name of a corporation. 

     The debtor had transferred the plaintiff/creditor's trust funds to a limited partnership of which the investment company, the debtor's alter ego, was a general partner, without any notice to the plaintiff. Further, the debtor failed to properly account for the location of the funds. The debtor was also an officer, director and 50 percent shareholder in the corporation, and most importantly, was the person who made the investment decisions concerning client funds. The debtor was the alter ego of the investment company, and the Court found that the company was used in conjunction with the limited partnership to obscure fraudulent conduct with respect to the plaintiff. Therefore, the Court invoked the doctrine of piercing the corporate veil to hold the debtor personally liable for acts of the corporation.

     The Court held that the judgment was also exempt from discharge under Bankruptcy Code §523(a)(2)(A) because of the debtor's actual fraud. The debtor's statements, reports and correspondence concerning the existence of certificates of deposits were misrepresentations of material facts which were made by the debtor in an effort to deceive the plaintiff, and upon which the plaintiff relied, permitting the debtor and the investment company to use the trust funds in violation of an express trust. As a result of those misrepresentations, the debtor lost $107,000 of the plaintiff's trust funds. The Court found that this conduct on the part of the debtor constituted fraud.

     The Court further found that even if it could be argued that the debtor intended to repay the funds, his lending the plaintiff's funds on an unsecured basis while lying to the plaintiff about the nature of the investment constituted reckless conduct tantamount to fraud.

Bankruptcy: Dischargeability of Debt - False Financial Statement

     In the case of Chopp & Co. v. Luria, the United States Bankruptcy Court at Alexandria, Virginia, concluded that a bankrupt builder's omission from a supplier's credit application of a bank's earlier consent judgment against the builder was not made with the "intent to deceive" and the builder's debt to the supplier was not exempt from discharge pursuant to Bankruptcy Code §523 (a)(2)(B). 

     The Court found as fact that the debtor signed a credit application which he knew was being submitted to the creditor. The Court further found as fact that the credit application incorrectly represented that the debtor had no judgments entered against him within the last five years when, in fact, there had been a substantial judgment docketed against the debtor within one year of the credit application. The Court also found as fact that the consent order was entered under a workout agreement on a separate loan. The Court further found as fact that the debt had been fully paid off, the judgment did not show up on the builder's credit report, and there was no evidence that the builder knew that the consent order had ever been entered. The Court noted that the judgment at issue arose from a financial workout agreement between the bank, the debtor and other related parties on a large mortgage loan. As part of the agreement, under which the bank was to be paid in full, the debtor and his related entities executed the judgment order by consent. Under the agreement the loan was to be paid by new financing and by sales of property. The consent judgment essentially served as backup protection to the bank if its loan was not fully paid by a set date. This deadline passed without full payment because of delays in settlement under contracts for sale of realty by the debtor's business entities. The contemplated settlement eventually took place, and the bank's judgment had been paid in full six months before the debtor made the credit application at issue.

     Considering all of these facts in light of the applicable law, the Court had to determine, in order to find that the debt was nondischargeable, that the debtor's statement was materially false, that the creditor reasonably relied on the statement, and that the debtor had the intent to deceive the creditor.

     In regard to the "materially false requirement", the Court ruled that "..the omission of such a substantial judgment from debtor's credit application was plainly a materially false statement..".

     Upon considering reasonable reliance, the Court ruled that "...the evidence demonstrates that plaintiff had a very conservative policy on extending credit and that its policy has resulted in lower than average bad debts. Based upon plaintiff's unrefuted evidence, it seems likely that plaintiff would have denied open account credit to debtor's corporation if the judgment had been disclosed...". "..plaintiff's reliance on debtor's credit application was objectively reasonable and was actually relied upon by plaintiff in extending credit...".

     In regard to the "intent to deceive" requirement, however, the Court found that the evidence failed to establish that debtor actually knew that the judgment had been docketed. The Court then looked to see if the intent could be imputed through reckless indifference. Given the workout arrangements, given the fact that the judgment was paid within three months of entry, given the fact that no adverse information appeared on the debtor's credit report, and given the fact that there was no evidence that the debtor had been informed of the bank's entry of the judgment, the Court stated that it was unwilling to infer from the circumstantial evidence that the debtor recklessly failed to disclose the judgment. Accordingly the Court concluded that the debtor did not publish the financial statement with intent to deceive plaintiff.

Bankruptcy: Liquidating Secured Property

     In the case of Mann v. CCB Financial Planning Ltd., the United States Bankruptcy Court in Alexandria, Virginia, ruled that a creditor could not amend its complaint objecting to dischargeability in a case to defeat a timely filing requirement, and that the improperly filed complaint should be dismissed. 

     In Mann the debtor had filed bankruptcy, both individual and corporate petitions. The creditor filed its complaint in the corporate petition but not in the individual petition. The creditor later filed a motion to amend its complaint alleging an exception to dischargeability against the corporation to alleging an exception to dischargeability against the individual. The motion to amend was filed after a time that a complaint objecting to dischargeability against the individual would be timely filed. The creditors and their counsel conceded that they had notice of both bankruptcy filings, and that they mistakenly filed their complaint in the wrong case. They contended, however, that they were confused by the designations "AKA" and "DBA".

     The Bankruptcy Court reviewed the provisions of Bankruptcy Rule 4007(c) and determined that the Court had no discretion to allow a late-filed motion objecting to dischargeability or to grant a late-filed motion for enlargement of time to file such a complaint, even in cases of excusable neglect. Accordingly, upon reflection of the facts and the rules, the Bankruptcy Court determined that the time limits were not met, that they had no discretion to allow for the amendment, and that the debtor's motion to dismiss should be granted.

     The lesson of Mann, as it is in so many cases, is that creditors should retain the services of counsel who has extensive experience in creditor representation.

Bankruptcy: Dischargeability - False Oath

     In the case of Federal Deposit Insurance Corp. v. McFarland, the United States Bankruptcy Court, sitting in Arlington, Virginia, Judge Tice, denied the debtor, a real estate developer, a discharge in bankruptcy because of false testimony.

     The creditor had brought a complaint objecting to dischargeability because of allegedly false testimony given by the debtor in examinations under oath after the filing of the debtor's bankruptcy petition.
     The Court found as fact that the debtor gave false testimony under oath 1) that he did not receive from a closely held corporation any proceeds of a $440.00 certificate of deposit, when in fact he and his co-shareholder each received $220,000 and 2) that he had no bank accounts in nor made any deposits to offshore banks, when in fact he drew checks in amounts in excess of $300,000 payable to a Cayman Island bank.
     Although the debtor denied that he had any fraudulent intent when he testified, the Court found it "highly implausible" that the debtor forgot about the withdrawal of the $220,000. The debtor also failed to produce any credible evidence refuting the natural presumption that some $300,000 worth of checks admittedly drawn by debtor payable to an offshore bank were transfers of funds to the bank or to an account in the bank.
     Accordingly, Judge Tice found the evidence sufficient to warrant denial of the debtor's discharge.

Bankruptcy: Objection to Discharge - Willful and Malicious Injury by Depriving Access to Secured Collateral

     A few years ago I tried a case in the United States Bankruptcy Court, Eastern District of Virginia, Richmond Division, Judge Huennekins, that will be of interest to many lenders who hold a security for their loan. My client was Dominion Credit Union. At the request of the debtor, and, as part of a settlement where the debtor agreed to pay on the judgment rendered, I agreed not to state the debtor’s name.

     The factual scenario is as follows: the Credit Union had made a $30,000.00 loan to the debtor in March, 2006 to purchase a pickup truck from Chambers Auto. The loan was secured by this pickup truck. There was no co-signer for the loan, nor was the debtor married. The debtor’s loan application made no reference for the purpose for which the loan was sought. The debtor listed no other owner or user. Within two months the debtor became delinquent. The Credit Union ordered repossession of the truck. The repossession company could not find the truck, and the debtor offered minimal cooperation, claiming only that another person had the vehicle and took it out of state. The debtor referenced the name of the person, Michael Chambers (this name became important years later, but note that the name of the company from which she purchased the vehicle was Chambers Auto). The debtor did provide a telephone number for Michael Chambers. The repossession company made several attempts to repossess the truck, checking at the debtor’s residence on various days and at various times, but to no avail. Calls were also made to Michael Chambers. On one occasion Mr. Chambers said that he was out of state, and, that he was also in the repossession business. With no luck at repossession, the Credit Union retained me to obtain judgment against the debtor and try collection. While judgment was obtained for over $29,000.00 plus costs, interest and attorney’s fees, collection was difficult, as the debtor was constantly in school and working only part-time. Finally in early 2010 I found the debtor working a sufficient number of hours to garnish, and issued the garnishment. As a result of the garnishment, the debtor filed a Chapter 7 bankruptcy case in March, 2010, seeking discharge of all of her financial obligations – at this point in her life the debtor had accumulated some other debt as well, and was finally about to complete her schooling and become a full time nurse. I advised the debtor’s attorney that I would be objecting to the discharge of this debt based upon the fact that we had been unable to obtain the truck since May, 2006, and that we had obviously lost money due to the debtor’s willful and malicious injury to the Credit Union by depriving it access to and repossession of the collateral securing its loan pursuant to Bankruptcy Code Section 523(a)(6). The debtor’s attorney responded by stating that the truck would be surrendered. Weeks passed without the debtor surrendering the truck, so I filed an objection to the dischargeability of the debt. Subsequently the truck was returned, but in horrible condition, having limited value, resulting in a substantial loss to the Credit Union.

     To prepare for the trial of the case I conducted written discovery and scheduled depositions of the debtor and Michael Chambers. Depositions were scheduled on several dates. On the first date both parties appeared (although almost an hour late), even though I had only subpoenaed the debtor. I excluded Mr. Chambers from the debtor’s deposition – important because Mr. Chambers tried to “control” the proceedings. At the debtor’s deposition she stated, for the first time, that the truck was purchased as a business deal with her brother (although not an actual blood brother, but someone just like a brother, named “John Jones”). She and Mr. Jones had a “falling out” and he left with the truck, never to have contact with him again, and not knowing where either he or the truck was. The debtor denied telling the Credit Union or the repossession company that Michael Chambers had it. The debtor admitted that she and Mr. Chambers were now boyfriend and girlfriend, although she was not sure when this relationship commenced, although probably within six months of the loan. The debtor admitted that Chambers Auto was a family business, but that Michael Chambers’ father ran it. The debtor stated that when it became apparent that she would not be able to get a bankruptcy discharge without surrendering the vehicle to the Credit Union, Mr. Chambers (who had a “questionable” past and had “questionable” connections) “put the word out on the street”, and magically the vehicle was returned to Mr. Chambers. The debtor also stated that they tried their best to put the vehicle back in decent shape, but ran out of time. Following the debtor’s deposition, I tried to immediately take Mr. Chambers’ deposition, but he and the debtor said that they had no time and had a child care problem. A new date was set for Mr. Chambers’ deposition. However, he failed to show on that date. I advised the Court of this lack of cooperation, asked for a continuance to obtain the necessary evidence to prove my case. The Court granted the continuance and set a new trial date. I then set a new deposition date for Mr. Chambers, who, this time did show up, although about an hour late again. Mr. Chambers’ testimony was similar, but somewhat inconsistent with that of the debtor in some key areas.

     On the trial date Mr. Chambers’ failed to appear in Court despite subpoena. His deposition was submitted into evidence, and the Court issued a Show Cause summons against him for his non-appearance. After hearing all of the evidence, the Court ruled that the debtor did willfully and maliciously injure the Credit Union by depriving it access to and repossession of the collateral securing its loan pursuant to Bankruptcy Code Section 523(a)(6), and awarded non-dischargeability to the extent of the Credit Union’s reasonable loss based upon the debtor’s conduct.

     The lesson of this case: be diligent about repossession efforts, document all events, and if the debtor deprives you of the security and attempts to discharge the debt in a Chapter 7 bankruptcy case, object!

Bankruptcy: Dischargeability - Money Judgment

     In the case of In Re: James H. Harris the United States Bankruptcy Court for the Eastern District of Virginia showed a willingness to assist creditors in clear abuse cases. In Harris Judge Tice determined that a debt which resulted from the debtor's conversion of a stolen Mack Truck was exempt from discharge pursuant to the Bankruptcy Code, and determined that the amount of damages excepted from discharge was $11,620.47. The Bankruptcy Court also entered a money judgment for the creditor in that excepted amount, even though at least one Federal District Court has held that a Bankruptcy Court does not have jurisdiction to enter a money judgment in a Bankruptcy Code §523 proceeding.
     Judge Tice stated that every determination by a Bankruptcy Court of the validity of a claim is a determination of whether a creditor is entitled to monetary damages from the debtor. The issues raised regarding the validity or existence or amount of a debt are inextricably interwoven with the determination of dischargeability, and are therefore within the equitable jurisdiction of the Bankruptcy Court.

Bankruptcy: Dischargeability of Student Loans

     Student loans generally are non-dischargeable debts and pass through the bankruptcy process unaffected. Congress has provided that government-guaranteed student loans are nondischargeable in bankruptcy unless the debtor can demonstrate that the repayment of such student loans would constitute an undue hardship under Bankruptcy Code 523(a)(8).  However, there are exceptions that allow for dischargeability.  In this blog and a December blog, I will review three cases to examine the application of Bankruptcy Code §523(a)(8) concerning the dischargeability of student loans.

      The first case is Murphy v. CEO/Manager, Sallie Mae, heard by the United States Bankruptcy Court at Norfolk, Virginia.  In Murphy the court found as fact that the debtor’s nine year old daughter was permanently disabled, as she suffered from Pfeiffer syndrome.  This disability caused the debtor to discontinue her medical education.  It also impeded the debtor’s ability to work.  The loans in question totaled $58,000.00, on which no payments were ever made.  However, the debtor’s husband earned $82,000.00 annually.  Further, the debtor’s evidence illustrated a monthly family disposable income of $400.00.  The debtor argued that the family’s net disposable income was not available to repay her student loans because she and her husband had a savings account in the event that he was laid off.  At the time of the bankruptcy, the account had $2,500.00.  The court further noted that based upon the debtor’s testimony that her son was changing from private school to public school, it was logical to presume that there was an additional $507.00 per month available from the savings in private school tuition plus an extra $109.00 per month paid on an automobile that would be available for student loans.  Eliminating these household expenses and adding these to the $400.00 already noted as per month disposable net income to pay toward the student loan debt.

     The Court stated that it was doubtless that the debtor’s burden of caring for her disabled child was immeasurable, and her disappointment in her inability to complete her medical education immense. However, discharge of a student loan must be founded on more than notions of fairness or sympathy. Because of the debtor’s husband’s successful employment, the debtor and her dependents enjoyed an income well in excess of nearly all who seek undue hardship discharge, and a substantially more comfortable lifestyle than the minimal one contemplated by the criteria for a hardship discharge. Accordingly, the court found that the student loans were non-dischargeable, and thus denied the debtor’s motion to discharge her student loans due to hardship under Bankruptcy Code §523(a)(8).

Bankruptcy: An Examination of the Dischargeability of Debts Regarding Property Damage-Malice

     In a past blog I began a multi-issue review of cases that address the dischargeability of debts regarding property damage-malice. The relevant bankruptcy code provision is §523(a)(6). I briefly established the standard used by courts to determine dischargeability of debts involving property damage and discussed how the court applied the standard to a case involving rented property.
     In the case of First Nat'l Bank of Md. v. Stanley, the United States Bankruptcy Court at Baltimore, Maryland, ruled that a debtor, whose creditor bank mistakenly extended his line of credit, and who used that windfall to purchase property that he speculated would shortly rise in value, converted the bank's money, despite his "good intentions" toward repayment, and discharge of the debt to the bank was denied as "willful and malicious" injury to the creditor under Bankruptcy Code §523(a)(6).
     The Court ruled that the act or conduct at issue in Stanley was conversion - an unauthorized exercise of dominion or control over property belonging to another that seriously interferes with the owner's rights. Although a person need not know that someone else has superior ownership rights in the property to be technically liable for the tort of conversion, the Court held that the test for malice under Vaughn requires such knowledge on the debtor's part before discharge will be denied - in other words, the debtor must have engaged in a "wrongful" conversion.
     In this case, the Court found that conversion was wrongful. The debtor knew that something was amiss when his credit limit on his line of credit was suddenly increased by a factor of ten. His explanation that he thought the bank had granted him a $73,000 "unsecured" line of credit was wholly irreconcilable with his knowledge that, just three months earlier, he had been approved for $2,000 less than the relatively modest secured line that they had requested. The Court pointed out that the debtor, though not a loan officer, was an accountant with one year of graduate school education; he was, by no means, unsophisticated.
     The proper focus in this case was not on debtor's "good intentions", but simply on his exercise of dominion and control over funds that he knew belonged to another. The debtor's deliberate conversion of the funds is the intentional, wrongful act that prevented the discharge of this debt to the bank.
     The Court found that the debtor inflicted willful and malicious injury on the bank; thus, he was not entitled to be discharged from the resultant debt.
     A future blog will apply the standard used by courts to determine dischargeability of debts involving property damage to another case involving withheld payments.

Bankruptcy: An Examination of the Dischargeability of Debts Regarding Property Damage-Malice

     In a previous blog I began a multi-issue review of cases that address the dischargeability of debts regarding property damage-malice. The relevant bankruptcy code provision is §523(a)(6). I briefly established the standard used by courts to determine dischargeability of debts involving property damage. The standard is very fact specific so reviewing cases will shed light on how the standard is applied.
     In Appalachian Equipment & Supply Co. v. McDaniel, the United States Bankruptcy Court at Harrisonburg, Virginia, determined that the creditor/plaintiff, a rental company, had satisfied all of the elements necessary to prove its case under Bankruptcy Code §523(a)(6), and thus, its claim for damages from the improper use of the forklift was declared exempt from discharge.
     The Court in McDaniel ruled that the physical evidence was the most reliable evidence offered. That evidence showed that the forklift was delivered to the debtor in normal operable condition. It also showed that when the creditor picked up the forklift, it was damaged and displayed light blue paint on the bottom of the carriage. The debtor's evidence showed that one of the vehicles which was placed on the tractor trailer was a light-blue car. To the Court, it appeared more likely than not that the bottom portion of the carriage of the forklift was used in conjunction with attempting to crush the light-blue car such that paint flecks from the car attached themselves to the underside of the carriage. The Court indicated that it was satisfied that the expert testimony of the witness for the creditor established that more likely than not that the carriage of the forklift was used to apply hydraulic pressure in a downward direction with such force that the carriage boon and forks of the forklift were damaged. In conclusion, the Court found that the debtor used the carriage to accomplish his intent to crush cars, such use was inconsistent with the normal usage of the forklift, and such usage led to the damage of the forklift. The Court further found that the creditor proved by a preponderance of the evidence that the debtor's actions in using the forklift were intentional.
     The Court in McDaniel found that the debtor knew that a forklift should not be used to crush cars. The physical evidence and the expert evidence offered by the creditor were more persuasive than the debtor's attempts to deflect blame to another person. It showed that the debtor applied the boon portion of the forklift to employ downward hydraulic pressure to the crush the cars. The Court ruled that it was satisfied that the debtor used the forklift in an improper manner to crush the cars in order to load them onto his flatbed trailer. The Court found that the debtor was an experienced forklift operator. He brought equipment to the site which could have been used to safely crush the cars. He used the forklift in a manner inconsistent with the generally accepted practice for the usage of this type of forklift. In light of these surrounding circumstances, the Court ruled that the debtor knew, or should have known, that his acts would cause damage to the forklift and resulting harm to the creditor. Thus, the Court ruled that the debtor's actions fit the definition of malice as set forth in the case of St. Paul Fire & Marine Ins. Co. v. Vaughn, the standard for denial of discharge.
     In a future blog I will apply the standard used by courts to determine dischargeability of debts involving property damage to a case involving withheld payments.

Bankruptcy: An Examination of the Dischargeability of Debts Regarding Property Damage-Malice

     In a past blog I announced that we would begin a multi-issue review of cases that address the dischargeability of debts regarding property damage-malice. The relevant bankruptcy code provision is §523(a)(6).
     Several cases illustrate well the dischargeability of debts involving property damage. In all cases, the trial and appellate courts are required to adhere to Bankruptcy Code §523(a)(6), which states that a debt causing willful and malicious injury to another entity is not exempt from discharge.
     The standard established by the courts to prove willful and malicious injury is described by the court in St. Paul Fire & Marine Ins. Co. v. Vaughn. In Vaughn, the Court of Appeals for the Fourth Circuit stated that the debtor must show, by contradicted and unimpeached evidence, to have committed a willful and malicious injury to the creditor’s property. There is no requirement of specific malice on the part of the debtor, however. The court held that “willful and malicious” injury means injury that is wrongful and without cause or excuse, but the debtor does not necessarily need to have ill will.
     However, this is a very general definition. Courts have applied this standard to many different situations and it is clear that this standard is very fact specific.  A future blog will apply and expand this standard in a case involving rented property.

Bankruptcy: Dischargeability of Debts Regarding Property Damage-Malice

     In a future blog, we will begin a multi-issue review of cases that address the dischargeability of debts regarding property damage-malice.
     Several cases illustrate well the dischargeability of debts involving property damage. In all cases, the trial and appellate courts are required to adhere to Bankruptcy Code §523(a)(6) which states that a debt causing willful and malicious injury to another entity is not exempt from discharge.
     If you have cases involving property damage that may fall within this code section, please let me know.