Can you get rid of all debt by filing for bankruptcy?
QAlex Jones, the famous radio host, has a big judgment against him (something like $1 billion for defaming Sandy Hook families). He is under bankruptcy protection, but that debt isn't going to be avoided?
A11 U.S.C. (United States Code) Section 523 sets forth the exceptions to discharge (in other words, getting rid of) a debt in bankruptcy. These exceptions include (a) tax or a customs duty of certain kinds, (b) money or refinancing obtained by false pretenses or false representations, (c) a fine or penalty payable to a governmental unit, and (d), as to Jones, harm caused by wilful and malicious conduct.
Jones has filed a Chapter 11 bankruptcy, and is separately appealing the jury verdict against him. The bankruptcy judge has determined that the Sandy Hook verdict against Mr. Jones falls within the meaning of the exception for “willful and malicious conduct.” If his appeal of the verdict is unsuccessful, the debt will continue to be owed.
QWhat is a Chapter 11 bankruptcy, and how does that compare to a Chapter 7 bankruptcy?
AA Chapter 11 bankruptcy is often referred to as a “reorganization proceeding.” That is because the debtor is going to submit a plan as to how they (or a company) will restructure things in order to be able to pay off at least some of the debts, be it in whole or in part, and then come out of the bankruptcy to continue forward. So the party is “reorganizing.”
Chapter 7, on the other hand, is what is referred to as “straight liquidation.” The debtor seeks to rid themselves of debts to the fullest extent permitted by law. The effort is not, as with a Chapter 11, to reorganize to pay off creditors to at least some degree, and then return to the fold; the effort is to dispose of debts to the fullest extent possible.
Bankruptcy Basics
This online link published by the United States Bankruptcy Courts has a good review of basics with regard to bankruptcy matters: uscourts.gov/servicesforms/bankruptcy/bankruptcy-basics. practicing attorney for over 40 years and has also served many times as a judge pro tem, mediator, and arbitrator. It is important to keep in mind that this column presents a summary of the law, and is not to be treated or considered legal advice, let alone a substitute for actual consultation with a qualified professional.