Can Bankruptcy Discharge a Default Judgment for Fraud?

Question from Sweetie, Can Bankruptcy Discharge a Default Judgment for Fraud?

Answer from AI:

Understanding Default Judgments and Bankruptcy

When a defendant loses a case by default judgment, it means they did not respond or appear in court, and the court ruled in favor of the plaintiff. If the case involves insurance fraud or fraudulent misrepresentation, the defendant might consider filing for bankruptcy to discharge the debt. However, not all debts can be discharged in bankruptcy, especially those related to fraud.

Bankruptcy and Fraudulent Debts

Under U.S. bankruptcy law, certain types of debts are not dischargeable. According to the Bankruptcy Code, debts incurred through fraud are typically non-dischargeable. Here’s a general overview:

• Section 523(a)(2)(A) of the Bankruptcy Code states that debts for money, property, services, or credit obtained by “false pretenses, a false representation, or actual fraud” are not dischargeable.
• This means if a court has determined that the debt arose from fraudulent misrepresentation, it is likely non-dischargeable in bankruptcy.

Steps for a Pro Se Plaintiff to Collect a Judgment

If you are a pro se plaintiff (representing yourself) and the defendant files for bankruptcy, there are steps you can take to try to collect the judgment:

1. File an Adversary Proceeding: You may need to file an adversary proceeding in the bankruptcy court to argue that the debt should not be discharged due to fraud. This is a lawsuit within the bankruptcy case.
2. Gather Evidence: Collect all evidence that supports the claim of fraud, such as documents, communications, and witness statements.
3. Meet Deadlines: Be aware of and adhere to all deadlines for filing objections to dischargeability in the bankruptcy case.

When to Seek Legal Advice

Navigating bankruptcy law and collecting judgments can be complex, especially when fraud is involved. It is advisable to consult with a legal professional who specializes in bankruptcy and debt collection to:

• Understand the specific implications of your case.
• Receive guidance on filing an adversary proceeding.
• Ensure compliance with all legal procedures and deadlines.

Additional Resources

For more information, you can refer to the following resources:

• Bankruptcy Basics – U.S. Courts
• 11 U.S. Code § 523 – Exceptions to discharge – Legal Information Institute

Remember, while self-help resources can provide general guidance, personalized legal advice is crucial for navigating specific legal challenges effectively.