Articles Posted in Bankruptcy FAQ

Willful and malicious injury debts are rare, but they happen when someone has placed a claim against you, stating that you intentionally hurt them or their property.  In the Fifth Circuit Court of Appeals (which includes Mississippi), a “willful injury” is one where the debtor purposefully caused the injury, and didn’t just purposefully perform the act that resulted in harm to the person or property.  A “malicious injury” is when injury results “without just cause or excuse”.

You can discharge (wipe out) debts for willful and malicious injury to property in a Chapter 13 bankruptcy but not in a Chapter 7.

You can discharge (wipe out) debts for willful and malicious injury to a person in a Chapter 13 but the Chapter 13 must be filed before the state court action has gone to judgment. You cannot discharge (wipe out) this type of debt in a Chapter 7.

Debts stemming from a fine, penalty, or forfeiture payable to and for the benefit of a governmental body, (other than a tax penalty in some cases), cannot be discharged by bankruptcy. Criminal restitution in all forms will have to be paid in full; however, filing a Chapter 13 bankruptcy can be used to stretch the payment of the restitution out over a 60 month (5 year) period. Extending these payments can be significantly lower than the monthly restitution payments as set up by the court. There may be situations where the restitution cannot be paid in full through the maximum period allowable in a Chapter 13 bankruptcy, so the debtor may need to do 2 or more Chapter 13 cases back to back. This would provide for repayment of the restitution over a longer period of time than the 60 months (5 years) allowed in a single Chapter 13 bankruptcy case.

Something most people do not realize (including attorneys who are not versed in bankruptcy law), is that if someone has been hurt and there is a statute of limitations governing the timeline the person has to take action upon that injury (using personal injury as one example), filing a bankruptcy will extend such statute of limitations by 2 years as long as the filing of the bankruptcy was before the expiration date of the original statute of limitations.

Bankruptcy Code § 108(a) allows a bankruptcy trustee to commence an action on behalf of a debtor’s estate within the period allowed by state law for such an action, or within two years after the filing of the bankruptcy, whichever is later. Stanley v. Trinchard, 579 F.3d 515, (5th Cir. 2009).

The language about the trustee commencing the action should not raise concern with you or with your personal injury (or other such) attorney.  The trustee will always keep the original attorney that was hired by the client for the associated case. Never do Trustees handle personal injury or other cases themselves.  Being able to have 2 years added to the statute of limitations can be a huge advantage!

Yes…but let me explain why you want to list everyone.  The bankruptcy rules require you list all of your creditors so the court can get an accurate picture of your financial situation.  Listing everyone you owe does not mean you will lose your house or car or other property.  Listing everyone you owe does not mean all your debt will be wiped out.  You want to have all your creditors listed so they get notice of the bankruptcy and they leave you alone while you take the time to decide who you want to pay and who you want to get rid of.  You can always pay back the creditors you listed after the bankruptcy if you wish.

Leaving off a credit card because you want to continue to use the credit card is not a good idea and it won’t work anyway.  Credit card companies and other creditors are constantly checking your credit reports in national databases and they will find out about the bankruptcy.   They will  cancel the card anyway, whether you owe a balance or not, no matter how good your payment record may have been.

Intentionally leaving a creditor off your bankruptcy papers may result in perjury or it may make the debt non-dischargeable and you will have to pay it.   Let’s play it safe and list everyone.  That way you are protected from them and you can always pay them later if you desire.

Within 90 Days of Filing Bankruptcy:

Luxury items charged to credit cards that total more than $550 within the 90 days of your bankruptcy filing are presumed to be non-dischargeable. Luxury items are defined as goods or services that are not reasonably necessary for the support or maintenance of your household. What does this really mean? Credit card charges made for food, gas, or diapers are not going to be a problem; but charges for a new stereo, a new HD TV, a ski trip, or summer vacation probably will.

Even though the law says that these charges are presumed to be non-dischargeable, the creditor would still have to file papers in your bankruptcy case to ask the court to declare the debt to be non-dischargeable.

Individuals with excessive debt sometimes wonder whether it makes sense to file for bankruptcy.  There are many reasons why people who need financial help should file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.  Making this decision is something you should discuss with a well informed Mississippi Bankruptcy attorney who is an authority in consumer bankruptcy.

Bankruptcy laws are there to help you get a fresh start and relieve you of the burden of overwhelming debt.

When Does Filing Bankruptcy Makes Sense.