In recent bankruptcy news, after famed sports broadcaster Erin Andrews won a multi-million dollar judgment against Michael Barrett for invasion of privacy and emotional distress, Andrews had to fight the case again in Barrett’s personal bankruptcy case. The case stemmed from Barrett secretly recording Andrews naked in a hotel room and then posting the video online for the world to see. During the trial Barrett filed for Chapter 7 bankruptcy protection, but recently the judge in Barrett’s bankruptcy eliminated Barrett’s hope of getting out from under the multi-million dollar verdict.
In a Chapter 7 bankruptcy case most debts are “discharged” meaning they do not have to be paid by the debtor after the case is over. Some debts such as certain taxes, student loans, and child support are not affected by bankruptcy because the law specifically says they are not discharged. In Barrett’s case, Andrews and her attorneys alleged that Barrett’s conduct was “willful and malicious” – those are magic words under Section 523 of the Bankruptcy Code. If a debtor engages in willful and malicious conduct then a bankruptcy judge can deem the debt arising from the conduct to survive the bankruptcy case, and thus personal bankruptcy will not absolve the debtor of their liability.
In Barrett’s case the judge found his conduct to be willful and malicious and therefore the judgment stands. This may be little consolation to Erin Andrews since Barrett’s bankruptcy filing indicated he has virtually no assets and very little income.
Because issues such as these are left to the judge’s discretion it is vital that if a debtor has potential debts that could be considered willful and malicious that they consult an attorney with the expertise to assess the risks and rewards of seeing bankruptcy relief.