If somebody who owes you money files bankruptcy, you may be able fight the discharge of your debt if it was acquired through fraud. Debt that is acquired through fraud is not dischargeable in bankruptcy.
Under 11 U.S.C. § 523(a)(2)(A). Section 523(a)(2)(A) excepts from discharge any debt:
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition. 11 U.S.C. § 523(a)(2)(A).
Under section 523(a)(2)(A), the creditor bears the burden of proving by a preponderance of the evidence, that: 1) the debtor obtained money through a material misrepresentation that, at the time,
the debtor knew was false or made with gross recklessness as to its truth; 2) the debtor intended to deceive the creditor; 3) the creditor justifiably relied on the false representation; and 4) its reliance was the proximate cause of the loss. In re Bradley, 507 B.R. 192, 205 (B.A.P. 6th Cir. 2014) (citing Old Republic Title Co. of Tenn. v. Looney (In re Looney), 453 B.R. 252, 259 (6th Cir. BAP 2011); and Rembert v. AT&T Universal Card Servs., Inc. (In re Rembert), 141 F.3d 277, 280–81 (6th Cir.1998)).
To prove fraud under Ohio common law, a plaintiff must prove the following elements: (a) a representation or, where there is a duty to disclose, concealment of a fact; (b) which is material to the transaction at hand; (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred; (d) with the intent of misleading another into relying upon it; (e) justifiable reliance upon the representation or concealment; and (f) a resulting injury proximately caused by the reliance. Schafer v. Rapp (In re Rapp), 375 B.R. 421, 431 (Bankr. S.D. Ohio 2007) (citing Burr v. Board of County Comm’rs, 491 N.E.2d 1101, 1102 (Ohio 1986)).
11 U.S.C. 523(a)(6) also allows you to fight the discharge of any debt acquired through malice or willful injury. That section states, in pertinent part, as follows: "a discharge under section 727. . . of this title does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity." Under this section, the elements of willfulness and maliciousness are both required to be proven in order to support a claim for nondischargeability. United States v. Vandrovec (In re Vandorvec), 61B.R. 191, 196 (Bankr. D. N.D. 1986).
The Sixth Circuit Court of Appeals (which covers Ohio) has qualified that a willful and malicious injury occurs only if a debtor (1) desires “to cause the consequences of his act, or” (2) “believes those consequences are substantially certain to result from it.” Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 464 (6th Cir.1999). See alsoIn re Bradley, 507 B.R. 192, 205 (B.A.P. 6th Cir. 2014); JP Morgan Chase Bank, NA v. Algire (In re Algire), 430 B.R. 817 (Bankr. S.D. Ohio 2010). “[B]ecause the word ‘willful’ modifies the word ‘injury,’ § 523(a)(6) requires a ‘deliberate or intentional injury, not merely a deliberate orintentional act that leads to injury.’” Westbury Village Assoc. v. Zweifel (In re Zweifel), 555 B.R. 659, 664 (Bankr. S.D. Ohio 2016) (quoting Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998)).