(Bankr. W.D. Ky. Jan. 27, 2015)
The bankruptcy court enters summary judgment in favor of the creditor, holding the debt owed to it is nondischargeable under § 523(a)(2), (4), and (6). The creditor had obtained a default judgment against the debtors in California state court, which judgment recited that the debtors had obtained funds from the creditor by fraud. The Full Faith and Credit Statute, 28 U.S.C. § 1738, as interpreted by the Sixth Circuit Court of Appeals precludes the debtors from defending against the findings in the state court judgment. Section 105 does not give the bankruptcy court authority to modify the otherwise non-dischargeable debt. Opinion below.
Author: Matt Lindblom