Non Dischargeability Actions
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Non-Dischargeability Actions (11 USC § 523)

As a general matter, bankruptcy is designed to give the debtor a “fresh start” and wipe the slate clean of all qualifying debts. In providing for the bankruptcy discharge, Congress intended for debtors to be able to avoid the burden of debt following them forever. However there are limitations on this right of debtors to discharge debts. As discussed below, debts that were the result of a criminal action, fraud or misrepresentation, and a few other wrongful intentional acts can be deemed “nondischargeable” by the bankruptcy court, but it must be proven very clearly by the creditor that the debtor had such requisite intent in most cases.

If you are facing a nondischargeability action by a creditor, or you are a creditor who was the victim of fraud, you need a skilled bankruptcy litigator at your side to prove your position. McFarlin LLP’s Irvine bankruptcy litigation attorneys will properly analyze your situation and protect your rights. Call (888) 728-0044 for a no-cost consultation on your case.

11 USC § 523(a)(2)(A) – Fraud

Section 523(a)(2)(A) gives rise to the most common nondischargeability cause of action in bankruptcy court. This section provides an “exception from discharge” for any debt that was procured by false representations, misleading or fraudulent omissions or actual fraud (which can be inferred.)

To establish a claim under 523(a)(2)(A), a creditor must demonstrate the following:

  1. The debtor made a representation to the creditor;
  2. The debtor knew at the time of the representation that it was false;
  3. The debtor’s intent in making the representation was to deceive;
  4. The creditor relied on such representation by the debtor;
  5. The creditor ultimately was damaged (lost money) as a result of the representation.

Additionally, if the debtor chose to omit or withhold certain material information from the creditor with the intent to mislead or deceive, the debtor has likely committed a fraudulent omission under the Code.

Fraudulent Intent

The subjective intent of the debtor at the time of the alleged misrepresentation is always a contentious issue in nondischargeability actions. Obviously to preserve his or her discharge, debtors frequently deny any sort of overt or intentional misrepresentation. This creates an immediate issue for the creditor pursuing a nondischargeability claim, because proving subjective intent is a prerequisite to prevail in the claim. However, the required intent can be “inferred” by the court using certain criteria and the totality of the circumstances.


In addition to proving the debtors subjective intent, a creditor pursing a nondischargeability action must also prove causation. More specifically, they must prove that the debtor’s wrongful misrepresentations were the cause of the creditors damage (loss of money). In most instances, a creditor relying on the representations made in a credit application is reasonable and will suffice to prove causation.

Bankruptcy Litigation Attorneys Serving Southern California

If you have been served with a nondischargeability complaint in bankruptcy court, or you are a creditor who has been the victim of fraud, call the skilled and knowledgeable bankruptcy litigation attorneys at McFarlin LLP today. We will analyze your matter at no initial charge, and provide you with the best plan of action to protect your rights. Oftentimes, claims can be frivolous and can be dismissed quickly by the right attorneys.

Call us today at (949) 570-5025.

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