If you are owed money by a debtor who files bankruptcy, you may still be able to collect the money by preventing the debt from being discharged in the bankruptcy. 11 U.S.C. section 523(a) contains a number of exceptions to discharge which apply to individual debtors (but not corporate debtors). Some common exceptions to discharge include: Debts for money, property, services, or an extension, renewal or refinancing of credit if obtained by false pretenses, a false representation or actual fraud or the use of a materially false statement regarding the debtor's financial condition (11 U.S.C. section 523(a)(2)); Debts for fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny (11 U.S.C. section 523(a)(4)); Debts for a domestic support obligations (11 U.S.C. section 523(a)(5)); Debts for willful and malicious injury by the debtor to another entity or the property of another entity (11 U.S.C. section 523(a)(6)); Certain debts to financial institutions (11 U.S.C. section 523(a)(11) and (12)); and, Debts to a spouse, former spouse, or child of the debtor that are incurred during the course of a divorce or separation (11 U.S.C. section 523(a)(15)).
It is important to remember that there are strict deadlines for filing a complaint for non-dischargeability in the bankruptcy action. For example, 11 U.S.C. section 523(c) states that debts under 11 U.S.C. section 523(a)(2), (a)(4), and (a)(6) will be automatically discharged unless the creditor files a complaint for non-dischargeability before the deadline. Federal Rule of Bankruptcy Procedure sets the deadline for the filing of a non-dischargeability action under 11 U.S.C. section 523(c) as 60 days after the first date set for the meeting of creditors under section 341(a). This deadline is strictly applied by the bankruptcy court and exceptions are rare.
The attorneys at Law Office of Hayes & Welsh are experienced at representing creditors throughout the course of bankruptcy proceedings, including by filing motions for relief from the automatic stay and complaints for non-dischargeability. Give us a call today to discuss your situation and the best course of action for you.
Megan K. Mayry McHenry, Esq.