Debts which may not be discharged

     When you file bankruptcy, you usually want to get rid of your debts -- in bankruptcy parlance, to discharge them.

     In a fairly recent case, the United States Supreme Court considered whether a creditor could succeed in having the debt owed to it ruled not discharged if the person who owed the debt lied to incur it. The summary by the Supreme Court says:

Respondent R. Scott Appling fell behind on his bills owed to petitioner law firm Lamar, Archer & Cofrin, LLP, which threatened to withdraw representation and place a lien on its work product if Appling did not pay. Appling told Lamar that he could cover owed and future legal expenses with an expected tax refund, so Lamar agreed to continue representation. However, Appling used the refund, which was for much less than he had stated, for business expenses. When he met with Lamar again, he told the firm he was still waiting on the refund, so Lamar agreed to complete pending litigation. Appling never paid the final invoice, so Lamar sued him and obtained a judgment. ....
Because Appling's statements were not in writing, the court held, [the Bankruptcy Code]      § 523(a)(2)(B) did not bar him from discharging his debt to Lamar.

     Frankly, it is never good to lie to your creditors.  Doing so may convert a debt that you could discharge into a debt you cannot discharge, under the theory that you tried to hinder, delay, or defraud your creditor.  That sort of objection arises under a different section of the Bankruptcy Code ( § 727).

     But with regard to a particular debt, if you lie in writing about the debt the creditor could use that writing to have your debt not wiped out.

     MORAL:  Either don't say anything, or tell the truth!  

     (Your mom would probably say the same thing!)