Default Judgments Are (Sometimes) Nondischargeable Under Issue Preclusion
Two decisions handed down on successive days under Illinois law explain when a default judgment will or will not result in a nondischargeable debt as a result of issue preclusion, or collateral estoppel.
Bankruptcy Judge Thomas M. Lynch of Rockford, Ill., confronted the more typical case. The debtor and the plaintiff were riding their motorcycles together after dark. The front wheel of the debtor’s motorcycle hit the back of the plaintiff’s, causing both to fall off their bikes and resulting in injuries to the plaintiff.
The plaintiff filed suit in Illinois state court, alleging negligence. The debtor did not respond to the complaint. The plaintiff’s counsel submitted a $1 million judgment by default, in which he inserted a handwritten section stating that the judgment was for willful and malicious conduct.
The debtor filed a chapter 7 petition after entry of the judgment. The plaintiff filed a complaint alleging that the $1 million default judgment was nondischargeable under Section 523(a)(6) as a “willful and malicious injury.”
Related Stories
June 9, 2022
IRS First Time Penalty Abatement – FTA The first-time penalty abatement (FTA) waiver is an…
March 26, 2022
If you filed a chapter 7 bankruptcy, look into filling IRS form 982 When you…
Posted in: Debt & Bankruptcy
March 26, 2022
DID SOMEONE FILE FOR UNEMPLOYMENT BENEFITS UNDER YOUR NAME? If you discover that someone has…
February 3, 2022
RICO suit, McKinsey In a decision last week, the Court of Appeals for the Second…
December 17, 2021
BEWARE OF USING MONEY FROM YOUR IRA OR 401(K) TO PAY DEBTS This can be…
Posted in: Debt & Bankruptcy
December 17, 2021
How to Spot Student Loan Scams. Things you can do to protect yourself. “Enroll now…
Posted in: Debt & Bankruptcy
January 23, 2021
Covid relief for evictions. New York has passed a COVID-19 Emergency Eviction and Foreclosure Prevention…
June 9, 2022
IRS First Time Penalty Abatement – FTA The first-time penalty abatement (FTA) waiver is an…
March 26, 2022
If you filed a chapter 7 bankruptcy, look into filling IRS form 982 When you…
Posted in: Debt & Bankruptcy
March 26, 2022
DID SOMEONE FILE FOR UNEMPLOYMENT BENEFITS UNDER YOUR NAME? If you discover that someone has…
February 3, 2022
RICO suit, McKinsey In a decision last week, the Court of Appeals for the Second…
December 17, 2021
BEWARE OF USING MONEY FROM YOUR IRA OR 401(K) TO PAY DEBTS This can be…
Posted in: Debt & Bankruptcy
December 17, 2021
How to Spot Student Loan Scams. Things you can do to protect yourself. “Enroll now…
Posted in: Debt & Bankruptcy
January 23, 2021
Covid relief for evictions. New York has passed a COVID-19 Emergency Eviction and Foreclosure Prevention…