“I meant to do it, but I’m really sorry” doesn’t count in bankruptcy
A recented decision by the Bankruptcy Court for the Western District of Kentucky reveals that bankruptcy is not the answer to relieve all debts, especially ones that come about by “willful” acts. In re Marklin, Case # 09-10939(1)(7) (Bankr.W.D.Ky., 2010) tells the tale of a farmer who borrowed over $100,000 to plant a crop. The bank held a security interest in the proceeds of the crop (a security interest is a legal right to get ownership of an asset if the debt isn’t paid). So far, this is all very common farming and banking practice.
Where things went wrong is that Mr. Marklin, with full knowledge that the bank held a security interest in the proceeds, sold the crop but kept all of the money for his own use. Now, I do not know that Mr. Marklin spent the money on luxury items or if he just used it to live off of and keep the farm going. It doesn’t really make a difference; what mattered to the court is that Mr. Marklin knew the security interest was in place but did what he did regardless.
Section 523(a)(6) of the bankruptcy code says that debts “for willful and malicious injury by the debtor to another entity or to the property of another entity” will not be discharged. Ordinarily, this section is thought to refer to the drunk driver who is not allowed to escape the debt of his injury when he wrecks into someone or an embezzler who stole funds. However, it has broader implications. For the person contemplating filing bankruptcy, it means that your intentions matter and that you need to operate in good faith towards creditors.
-
Recent
- Section 341 Meetings by Zoom in EDKY – Procedures
- The Impact of the CARES Act on Chapter 13 Cases
- “I Can’t Make My Plan Payments Right Now”: These Policy and Procedure Changes Might Help
- Secured Claims in a Chapter 13 Plan in the EDKY
- New Deadlines for Filing Tax Returns as Required by Section 1308
- Late Secured Claim Disallowed Under 12/01/2017 Amended Rules
- Increases in Prime Rate of Interest and in EDKY Trustee’s Fee
- Delinquent Property Taxes and the EDKY Chapter 13 Plan
- Chapter 7 and Student Loans
- Bitcoin and Bankruptcy
- The New Chapter 13 Plan in Operation: The Good, The Bad, and The Ugly
- Prime Rate; Bar Dates; & Other New Plan-Related Topics
-
Links
-
Archives
- April 2020 (1)
- March 2020 (2)
- March 2019 (1)
- January 2019 (1)
- November 2018 (1)
- October 2018 (1)
- May 2018 (1)
- January 2018 (3)
- December 2017 (2)
- November 2017 (1)
- September 2017 (2)
- July 2017 (1)
-
Categories
- Adoption
- Alternate Debt Relief
- attorney fees
- Bankruptcy
- Assets
- Automatic Stay
- Business debt
- Cash Advances
- Chapter 11
- Chapter 13
- Chapter 7
- Conversion
- Credit Counseling & Debtor Education
- Debt solution centers
- Discharge
- Disposable Income / Budget
- Exemptions
- Foreclosure
- Fraud
- Home Loan Modification
- Home loan modifications
- Means test
- Plan payments
- Planning
- Pre-filing planning
- Preference / Preferential payments
- Proof of Claim
- Property (exempt
- reaffirm or surrender)
- Redeem / Redemption
- Security interests
- Student loans
- Tax Debts
- The estate
- Blogroll
- Business & small business
- child custody
- child support
- Civil Procedure
- consumer bankruptcy
- consumer debt
- Debt collection
- dissipation of assets
- Divorce
- Estate Planning
- Family Law
- Financing
- Fraud
- Gratitude
- Guardianship
- Life & Law
- Marital Assets
- Mediation
- Negotaion & conflict resolution
- Parenting
- Paternity
- Politics
- property allocation
- Solo & Small Firm
- Spirituality
- Uncategorized
- Visitation/Time sharing
- Words & Phrases
-
RSS
Entries RSS
Comments RSS