Lefkovitz & Lefkovitz

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Nashville Office 615-256-8300
Cookeville Office 931-400-2218

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Bankruptcy could discharge debts from lawsuit judgments

On Behalf of | May 24, 2019 | Chapter 7 |

Some bankruptcy cases in Tennessee involve court-issued judgments that obligate defendants to pay debts resulting from lawsuits. Because federal law governs bankruptcy, the judgments issued by state courts will not automatically avoid discharge within a bankruptcy. A creditor expecting to collect on a judgment, however, might petition the bankruptcy court to deem the applicable debts nondischargeable if the judgment resulted from intentional conduct or fraud.

A creditor striving to defend a judgment debt from discharge in bankruptcy must produce adequate proof that the debtor acted intentionally or actually committed fraud. A bankruptcy court could look closely at the documentation for the original court case that produced the judgment. A bankruptcy court might block a judgment discharge if the debtor’s original actions satisfy four necessary elements. These are fraudulent misrepresentation, interference with the actions of another party, inflicting harm on the plaintiff and the plaintiff relied on the defendant’s misrepresentation.

A judgment debt arising from someone’s willful and malicious injury of another person or property might also survive the bankruptcy process. A creditor challenging the discharge of such a judgment must prove that the defendant acted with the intention of causing harm.

In general, federal law intends for Chapter 7 bankruptcy to provide a filer with a fresh start free of debt. A person under the burden of a judgment could talk to an attorney about the viability of discharging that debt with a bankruptcy filing. The legal evaluation could give the client insights about the possible results of a bankruptcy before proceeding with a filing. An attorney could act to defend the client’s position if a creditor challenges a bankruptcy action.

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