Unfortunately, not all debts can be eliminated, or discharged, in bankruptcy. Included in non-dischargeable debts are certain awards that arise from personal injury lawsuits. Bankruptcy Code Section 523(a)(6) states that debts for “for willful and malicious injury by the debtor to another entity or to the property of another entity” will not be discharged.
What that means is that if there is has been a lawsuit where you were found guilty of “willful and malicious” injuries, any award to the plaintiff can not be discharged. That also means that any settlement in which you admitted guilt would not be discharged. It can also mean that even if the plaintiff hasn’t brought a lawsuit, you could still be barred from discharging the potential award.
Judge Brooks of the District of Colorado Bankruptcy Court recently issued an opinion that addressed this very issue in In re Graham (11-01073-SBB). In that case, the debtor had settled a civil lawsuit for injuries arising from a fight on the baseball field. The debtor tried to discharge the settlement amount in his bankruptcy, claiming that he acted in self-defense. Unfortunately, this claim was contrary to his guilty plea agreement in the criminal matter that stemmed from the altercation. For Judge Brooks, the issue presented was where a debtor has been involved in an altercation pre-petition whereby he injures the other participant by punching him in the face, is there a “willful and malicious injury” so as to make the debt non-dischargeable.
Judge Brooks found that the injury was “willful” because it was intentional. There was evidence to support the finding that Graham had intended to strike the plaintiff. Brooks also found that the injury was malicious based on Graham taking action that that was “substantially certain to cause the injury” and that it was “wrongful, excessive, and without just cause or excuse.”
However, not all personal injury awards are excluded from discharge. You can still discharge personal injury awards that arise from negligence. If you have been sued in a civil lawsuit or think you might be sued, you should talk to a Colorado bankruptcy attorney about how bankruptcy will affect the lawsuit. You don’t want to file to only find out that the award isn’t dischargeable.
You can read more about Judge Brooks’ decision here.
If you have any questions about what debts you can get rid of when you file bankruptcy, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.