[CLBS] Fraud and Attorney Fees

[Tyler McGee]

Listmates,

Debtor ended up on the wrong side of a state court judgment to the tune of about $30,000. The first judgment was for $7,000 and the court specifically found that the Debtor was liable on the basis of fraud and set forth the elements of the case that satisfy the finding of fraud. The creditor's attorney then requested fees and costs in the additional amount of $23,000 and an amended judgment was entered. Debtor would like to file bankruptcy and get rid of the debt.

The initial $7k for fraud is likely nondischargeable under §523(a)(2) if the creditor brings a nondischargeablity action. As to the attorney fees associated with pursuing the initial fraud claim I see those as also potentially nondischargeable under the same section. In Re Bartenwerfer (BAP-NC-19-1178) seems to confirm this.

I intend to tell this debtor that the entire amount is likely nondischargeable. A bankruptcy only helps this debtor if the creditor never files a dischargeability complaint.  Am I off base or missing something?


Tyler J. McGee
ROY, NIELSON, PLATTS & McGEE
P.O. Box 487
Twin Falls, Idaho 83303-0487
Phone: (208) 734-4450
Fax:  (208) 734-4452