QUESTION
Can fraudulent punitive damages be dismissed in a bankruptcy?
Asked on Jun 14th, 2014 on Bankruptcy - Nebraska
8 ANSWERS
Bankruptcy Law Attorney serving Livingston, NJ
Partner at
Law Office of Stuart M. Nachbar, P.C.
2 Awards
No. Probably not.
Answered on Jun 18th, 2014 at 8:30 PM
Appellate Attorney serving Grosse Pointe Farms, MI
at
Musilli Brennan Associates, PLLC
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Usually not but an attorney would have to examine the details.
Answered on Jun 18th, 2014 at 8:30 PM
Debt Relief Attorney serving Anaheim, CA
Partner at
Marlin Branstetter Attorney at Law
Debts incurred as a result of fraud cannot be discharged in bankruptcy.
Answered on Jun 18th, 2014 at 8:29 PM
Do you understand the difference between dismissed & discharged in the context of a bankruptcy? 11 USC section 523 requires a creditor to take the steps to prevent a discharge of a debt, and if the creditor fails to file for relief in time, such debts can be discharged.
Answered on Jun 18th, 2014 at 8:29 PM
In the case of Cohen v. de la Cruz the U.S. Supreme Court ruled that 522(a)(2)(A) prevented the bankruptcy discharge of all liability arising from actual fraud, including punitive damages. You should discuss this issue with competent bankruptcy counsel prior to filing.
Answered on Jun 18th, 2014 at 8:29 PM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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I'm not sure what is being asked here - did the potential bankruptcy court debtor commit fraud and punitive damages were assessed against him or was the potential bankruptcy court debtor the victim of punitive damages which were fraudulently obtained. In the first case, generally, punitive damages will not be dischargeable in bankruptcy. In the second case, if the debtor can prove that the punitive damages were fraudulently obtained, they would be dischargeable - however, once an issue has been litigated and decided by another court, it's going to be difficult to even get the bankruptcy court to even look at the issue. Courts usually are bound to follow the rulings of other courts.
Answered on Jun 17th, 2014 at 9:56 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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Damages, whether punitive or not, can only be discharged in a bankruptcy case if the judgment holder does not file and receive a judgment for a complaint of nondischargeability. If the claim holder does not file the complaint on time, such debt is discharged along with all the other debts.
Answered on Jun 17th, 2014 at 9:56 PM
In general, punitive damages are not discharged in bankruptcy. If the punitive damages are related to some wrongdoing, the debt probably falls within an exception to discharge found in 11 USC 523. However, if the punitive damages are related to some negligent act, the debt maybe dischargeable. It is the creditor's burden to file an objection to discharge prior to the objection deadline. Should the creditor fail to timely file an objection, the debt is discharged.
Answered on Jun 17th, 2014 at 11:40 AM