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Federal Court in Western District of Kentucky Refuses to Change Lower Court’s Order that Debt was Dischargeable

Oftentimes, when a person goes through the bankruptcy process, debts are forgiven. Some debts, however, are not forgiven even after bankruptcy. These debts are called non-dischargeable debts. In a recent District Court opinion out of the Western District of Kentucky, a court explains that a dischargeable debt cannot be converted into a non-dischargeable debt unless the lower court orders it so. cut-expenses-1-1176251-m

Keeley v. Grider: A Background

In the recent case Keeley v. Grider, Grider took Keeley to court alleging roughly $300,000 in damages that arose due to fraud on the part of Keeley. Along with the judgment, Grider asked the court for a declaratory judgment stating that the debt (the $300,000 default judgment) was non-dischargeable. The bankruptcy court entered the default judgment against Keeley, because he did not appear in court, but refused to enter a declaratory judgment. The court explained that to do so would be improper and against the settled rules of the court. About a year later, Keeley filed for bankruptcy and the debt that he owed Grider was discharged.

Appealing the Case to the Western District of Kentucky

Unsatisfied that the debt that was owed to him was recently discharged, Grider took the issue up with the District Court in the Western District of Kentucky in the hopes of being allowed to collect on the debt owed. However, the District Court agreed with the lower court, that “[t]o do so would have been beyond the scope of relief allowed under [the applicable court rule of procedure].” The Court also explained that the lower court had the discretion to decide whether or not the debt would be dischargeable, and that court did not abuse its discretion in deciding that it would not make the debt non-dischargeable.

Bankruptcy Law Can Be Quite Complex

As you may be able to tell from the recent case out of Kentucky, bankruptcy law can be very complex and is best handled by those with years of experience. On occasion, dischargeable debts can morph into non-dischargeable debts if the proper procedures are followed; however, that was not the case here. To find out more about the federal bankruptcy laws, contact an experienced Indiana bankruptcy law attorney today.

When You Are Ready for an Experienced Bankruptcy Lawyer

If you are in the process of filing for bankruptcy, or if you believe that it may be inevitable, you are best served to contact an experienced Indiana or Kentucky bankruptcy law attorney as soon as possible. The earlier in the process you contact an attorney, the better a result you can expect in the end. The Schwartz Bankruptcy Law Center has years of experience in federal bankruptcy law and knows what it takes to help navigate their clients skillfully through the complicated procedures that are involved. To schedule a free initial, no commitment consultation today with a bankruptcy law attorney in your area, click here or call 866-366-3328 today.

More Blog Posts:

Cadle Co. v. Moore – Impact of Bankruptcy on Civil Lawsuit, Kentucky Bankruptcy Lawyers Blog, published February 19, 2014.

Louisville Bankruptcy Lawyers: Converting From Chapter 13 to Chapter 7, Kentucky Bankruptcy Lawyers Blog, published February 4, 2014.

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