What Is a Debt Owed for “Willful and Malicious Injury”?

These are so unusual you might not even think of them as debts — claims against you for intentionally hurting someone or his or her property.

Debts that might not be discharged (legally written off) in bankruptcy, including those allegedly incurred by fraud, including recent “luxury” purchases and cash advances. Today’s blog is about another category of debt that might not be able to be discharged. Although a claim “for willful and malicious injury by [you] to another entity or to the property of another entity” (Section 523(a)(6)) may be rare, if you someone is making such an accusation against you it is probably one of the main reasons you are considering filing for bankruptcy. So it’s important to understand how such a claim would be treated.

“Willful and Malicious Injury”

Unlike the part of the Bankruptcy Code about “fraud” debts, which contains 13 clauses and about 250 words, the one about “willful and malicious injury” contains only one short clause, the one quoted above. That’s all Congress said in describing this exception to discharge, so the courts have had to figure out what it means.

In the part of the country covered by the federal Fifth Circuit Court of Appeals, which includes all of Texas, a “willful injury” is one in which the debtor deliberately or intentionally caused the injury, and didn’t just deliberately or intentionally commit an act that led to the injury. A malicious injury is one “without just cause or excuse.” So we are talking about injuries that were committed with an objective substantial certainty that the act would cause harm or with an actual intent to cause harm.

Practically speaking, this includes personal injuries and property damages — on the personal side involving claims for civil damages arising from assault, rape or murder, while on property side claims arising from arson, vandalism, burglary or theft. But virtually any injury to a person or property could be included as long as it is “willful and malicious” as described above.

Dischargeable in Chapter 13?

Injuries to a person (including death) cannot be discharged in either Chapter 7 bankruptcy under Section 523(a)(6) that we have been discussing, or in Chapter 13 bankruptcy under a relatively new Section 1328(a)(4). However, injuries to property can be discharged in Chapter 13 because Section 1328(a)(4) only excludes personal injuries, while their discharge can still be challenged in Chapter 7 under Section 523(a)(6). So, if you have a significant claim or judgment against you for some sort of property damage, talk to your attorney about Chapter 13 bankruptcy as a possible solution.

If you are considering bankruptcy because of serious accusations against you of personal injury or property damage, or because you are in litigation or have had a judgment entered against you along these lines, you need the counsel and advice of a highly experienced bankruptcy attorney. If you are in the Dallas-Fort Worth metroplex, the Leinart Law Firm is here to serve you. Please schedule a no-obligation, free, confidential consultation with us by calling 1-800-518-3328 or contacting us here.


The Squeaky Wheel


I recently listened to a leadership expert address the challenge of dealing with the “squeaky wheel” in your organization. A squeaky wheel is a person or group that is constantly complaining or acting out. How much time and energy do we commit to greasing the wheel? His suggestion was that you grease it once and if it continues to squeak you ignore it. Most organizations spend too much time and energy on the squeaky wheel to the detriment of the rest of the team. They do so at their peril.

It reminded me of the people I have counseled over the years regarding their finances. The tendency is to focus on addressing the noisiest creditor and neglecting the quieter ones. We confuse our priorities when we pay the noisy unsecured creditor and fail to address the mortgage or car payment. I use the analogy of the patient who stubs his toe in the Doctor’s office after receiving news of a brain tumor. The throbbing toe is loud and immediate, but it can’t be the priority. Don’t let the squeaky wheel set your financial priorities. Seek wise counsel.