MODULE 27 BANKRUPTCY 243

(3) Transfer of property after filing with intent to defeat the law (i.e., fraudulent transfer)
(4) Making any false entry in or on any document of account relating to bankrupt's affairs
(5) These acts are also punishable by fines and imprisonment
2. Failing to satisfactorily explain any loss of assets
3. Refusing to obey court orders
4. Removing or destroying property within twelve months prior to filing of petition with intent to

hinder, delay, or defraud any creditor

5. Destroying, falsifying, concealing, or failing to keep books of account or records unless such act is

justified under the circumstances

6. "Substantial abuse" of bankruptcy by individual debtor with primarily consumer debts
7. A preferential transfer does not bar discharge (but can be set aside)
8. Debts Not Discharged by Bankruptcy (even though general discharge allowed)
9. Taxes within three years of filing bankruptcy petition
10. Loans for payment of federal taxes
11. Unscheduled debts unless creditor had actual notice of proceedings (i.e., where bankrupt failed to
list
creditor and debt)
EXAMPLE: In a petition in bankruptcy, a mistake was made so that a debt owed to ABC Company was listed as owed
to XYZ Company. The debt to ABC is not discharged unless ABC somehow was aware of the mistake.
12. Alimony, separate maintenance, or child support
13. Liability due to theft or embezzlement
14. Debts arising from debtor's fraud about hislher financial condition or fraud in connection with
pur-
chase or sale of securities
EXAMPLE: Obtaining credit using false information such as materially fraudulent financial statements that the
creditor relied on. .

15. Willful and/or malicious injuries to a person or property of another (intentional

torts)
a. Unintentional torts (i.e., negligence) and breaches of contract are dischargeable
16. Congress amended Bankruptcy Code making it more difficult for student loans to be discharged in
bankruptcy ,
17. This was prompted because many students have had large student loans to pay for tuition and

living expenses
(1) Upon graduation some students have few assets and may be inclined to file for bankruptcy
trying to get student loans discharged
18. Student loans are defined by bankruptcy code to include those loans made or guaranteed by units

of government
(1) Recent additions include loans for students made also by nongovernmental commercial
institutions such as banks
(a) Also includes stipends, scholarships or benefits given by educational institutions
19. Bankruptcy Code now provides that student loans can be discharged only if nondischarge would
cause "undue hardship" 'to debtor and any dependants
(1) "Undue hardship" is defined very strictly so s/he needs to basically show payment would
negate payment of basic necessities of food or shelter
(a) Cosigners such as parents who guarantee family member's student loan must meet same
"undue hardship" test to discharge obligation
20. Governmental fines or penalties imposed within prior three years
21. Those from a prior bankruptcy proceeding in which the debtor waived discharge or was denied
dis-
charge
22. Liability incurred by driving while legally intoxicated
23. To avoid the practice of "loading up on luxury goods" before bankruptcy, there is a
presumption of
nondischargeability for