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September 10, 2019

California federal court provides guidance on how to draft a stipulated judgment that is non-dischargeable in bankruptcy

By: Dustin Dellinger

The U.S. District Court for the Southern District of California held in In re Wlodarczyk (Cheikes v. Wlodarczyk) that a debtor’s failure to disclose his financial inability to pay a guarantee did not rise to the level of a fraudulent omission leading to non-dischargeability of the debt under Section 523(a)(2)(A) of the Bankruptcy Code, where the creditor failed to ask him to make representations regarding his financial condition and therefore the debtor had no affirmative duty to disclose that poor condition.  Thus, although the parties had stipulated to the judgment and stipulated further that the judgment was non-dischargeable, the court held that the judgment in that case nevertheless could be subject to discharge.  See https://www.leagle.com/decision/infdco20190716a39

Missouri federal court addresses entitlement of senior lender to collect default interest after the debtor’s bankruptcy

The U.S. Bankruptcy Court for the Western District of Missouri held in In re Family Pharmacy Inc. that federal law allows the application of equitable principles to deny a claim for default interest post-petition in an appropriate case.  The court also looked to state law to determine whether default interest is deemed a penalty.  See, https://www.leagle.com/decision/inbco20190708334

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