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There are ten categories of debt excluded from discharge under 523. These fall into two areas: debts that are not dischargeable due to wrongful conduct of debtor and debts that are not dischargeable due to public policy.
The debts not dischargeable due to debtor's misconduct include those created by intentional torts, fraud, larceny, embezzlement, fiduciary violations, and drunken driving. The debts not dischargeable due to public policy include alimony and child support, taxes and customs duties, governmental fines, penalties and forfeitures, educational loans, unscheduled debts and certain debts surviving a prior bankruptcy case. A claim must fall within one of these exceptions to be found non-dischargeable.
To prevail on a fraud exception, creditor would need to show that there was a false, material representation of fact made by debtor that debtor knew was false at time he made it, made with intention of deceiving creditor. Some courts have held that when a credit card is used, debtor impliedly represents that debtor has ability and intention to pay for goods and services charged. Those courts have therefore found that some credit card debt is non-dischargeable under fraud exception.
This is not only potential problem that can arise with credit card or similar debt. 523 also provides that there is a presumption that certain consumer debt created right before filing a Chapter 7 is non-dischargeable. The presumption of non-dischargeability will apply if debt is a consumer debt for so-called "luxury goods or services" incurred or within 40 days before filing, owing to a single creditor aggregating more than $500. Further, presumption of non-dischargeability will apply if there are cash advances made by a creditor for more than $1000 that are extensions of consumer credit under an open end credit plan within 20 days of filing bankruptcy.
Luxury goods and services are not defined by Bankruptcy Code and determination of same will be contingent upon facts and circumstances of each case. I can tell you that courts have characterized such items as a person computer, coffee maker, floral arrangements and three-wheel recreational vehicle as "luxury" items.
Any credit extended based on false financial statements is subject to exception from discharge. Statements made in financial statements have to be materially false with intent to deceive creditor to fall within this exception. Note that a credit application should not qualify as a "financial statement" if it does not require a disclosure of debts.
It is crucial for debtor to include all creditors in his schedules filed with court. If a debtor knows of creditor and does not schedule him, creditor is denied participation in any distribution; to protect creditor from this type of problem, code provides that unscheduled claims may be non-dischargeable.
Debts created by willful and malicious injury will also be excepted from discharge. These types of claims arise from intentional actions by debtor, done with malice which causes damage. It is important to note that ordinary negligence claims are dischargeable. A plaintiff with a personal injury claim would need to allege significantly more than simple negligence to have his or her claim deemed non-dischargeable in bankruptcy court.
Dismissal may also be justified if debtor is an individual who has primarily consumer debt and court finds that granting of relief would be a substantial abuse of bankruptcy process. Substantial abuse has been found by courts if debtor is actually able to pay his debts when due.
Joe L.Golson, writer and Affiliate Marketeer For Free information and services on Credit Repair and Bankruptcy. http://resultstracker.net/t.php?id=24165