Although almost all debts are discharged when someone files bankruptcy, there’s a small number of types of debts that aren’t discharged. For example, the bankruptcy code excludes from discharge any debts for willful and malicious injuries caused by the debtor. Prior to 1978 the standard for interpreting the phrase “willful and malicious” was whether the debtor had acted with “reckless or knowing disregard,” but passage of the Bankruptcy Reform Act of 1978 overruled that interpretation of the phrase.
The bankruptcy code now requires a showing that the debtor acted both intentionally and maliciously to cause not just the act but also the resulting injury. A creditor who wants to have a debt excluded from the bankruptcy discharge for an injury committed by the debtor must now prove by a preponderance of the evidence that the debtor acted with malicious intent to cause the resulting harm, not just that they acted intentionally in a way that resulted in the harm. Courts have ruled that malice requires more than just reckless behavior by the debtor.
In 1998, the United States Supreme Court ruled a creditor must show “that the actor intend ‘the consequences of an act,’ not simply ‘the act itself.’” Nondischargeability requires a deliberate or intentional injury, not just a deliberate or intentional act that leads to injury. The 8th Circuit Court of Appeals, which sets the precedent for cases originating in Iowa, has ruled that the bankruptcy code requires courts…to first determine exactly what ‘injury’ the debt is ‘for’, and then determine whether the debtor both ‘willful[ly] and malicious[ly]’ caused that ‘injury’”. This more restrictive standard for when debts aren’t discharged is very important to providing debtors with a fresh start. Injuries caused by simple negligence or recklessness can still be discharged. Only when the debtor’s behavior is shown to have been intentional in causing the actual harm, not just the injury, will they face possible nondischargeability of the debt.