Michigan Bankruptcy Blog
When a debtor files for bankruptcy, it is principally to obtain a fresh start and discharge of debts from creditors. But not all debts are dischargeable. The Bankruptcy Code lists 19 categories of nondischargeable debts, which Congress has determined are not dischargeable for public policy reasons.
Some debts are always nondischargeable, including certain taxes, child support, and court fines and penalties, to name a few. Others are not deemed automatically excepted from discharge, but can be when challenged by creditors. When a case is filed, bankruptcy courts set a deadline for creditors to raise nondischargeability issues, and creditors who wish to except a debt from discharge must initiate an adversary proceeding (by filing a complaint) setting forth the basis for the discharge objection. These types of debts include those obtained by fraud or false pretenses and those resulting from a tort, among others.
Issues related to the nondischargeability of a debt in a Chapter 7 bankruptcy were recently examined by the United States Bankruptcy Court for the Western District of Michigan. In the case, Trost v. Trost, Sherry Trost, the plaintiff, sought to except from discharge debt owed by the debtors (her stepson Zachary and his wife Kimberly) to her. The debt related to an ownership dispute involving videotapes and other memorabilia from a television show, Michigan Outdoors, that was created and operated by Fred Trost, Sherry's late husband and Zachary's father. Sherry alleged that she became the owner of these assets after Fred died, and that the debtors/defendants converted the property to their own use.
