Can a Judgment for Fraud be Discharged in Bankruptcy?

Full Question:

If I notarized a signature on a deed which turned out to be not the person who she said she was, the mtg co sues me for their loss, can the debt be discharged in Chapter 7 bankruptcy. I had no idea she was fake doing a scam on a bank.
04/30/2012   |   Category: Bankruptcy   |   State: Michigan   |   #25668

Answer:

The answer will dpeend on all the facts involved. If the lender gets a judgment against you based upon fraud, it is possible they can ask the court not to discahrge the debt and then it will be a matter of subjective determination for the court. Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor, such as the debtor's drunken driving).

There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13. Generally speaking, the exceptions to discharge apply automatically if the language prescribed by section 523(a) applies. The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees.

The types of debts described in sections 523(a)(2), (4), and (6) (obligations affected by fraud or maliciousness) are not automatically excepted from discharge. Creditors must ask the court to determine that these debts are excepted from discharge. In the absence of an affirmative request by the creditor and the granting of the request by the court, the types of debts set out in sections 523(a)(2), (4), and (6) will be discharged.


Please see the statute at the following link to determine applicability:

http://codes.lp.findlaw.com/uscode/11/5/II/523