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Can Heard Discharge the Judgment and Obtain a "Fresh Start"?
A fundamental concept of American bankruptcy law is to provide a "fresh start," enabling businesses and individuals to have a second chance in their business or personal financial affairs. The U.S. Supreme Court has recognized "that a central purpose of the [Bankruptcy] Code is to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy 'a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.'"1 Section 101, et seq.,2 provides for the discharge of debts through the bankruptcy process.
Nondischargeable Debts in General
Despite the underlying principle of a "fresh start," 523 lists 19 kinds of debt that can survive a bankruptcy case and allow creditors to continue collections.3 These nondischargeable debts include those arising from fraud, willful and malicious actions, family support, tax debts, and bad acts in general.4 A creditor bears the burden of proving each element of an exception to discharge by a preponderance of the evidence.5 As the Hyman court noted, "The consequences to a debtor whose obligations are not discharged are considerable; in many instances, failure to achieve discharge can amount to a financial death sentence. In view of these harsh consequences, exceptions to discharge are to be narrowly construed, and genuine doubts should be resolved in favor of the debtor."6
In addition to 523 excepting certain debts from discharge, the Bankruptcy Code entitles creditors and parties-in-interest to challenge a debtor's right to discharge.7 Thus, while the bankruptcy law protects "honest but unfortunate"8 debtors from debts they incur, it also protects creditors who have claims against debtors that, as a matter of public policy, should not be discharged.
Depp v. Heard Judgment
The well-publicized defamation case of Johnny Depp and Amber Heard resulted in a judgment of $10,350,000 against Heard.9 Assuming that Depp will seek to enforce the judgment, whether filing personal bankruptcy under chapter 7 can provide relief to Heard and discharge the judgment remains to be seen. A decision to file for bankruptcy will depend on many factors, including Heard's other assets and debts, available exemptions, and the likelihood of discharging the judgment debt. If Heard chooses...