I have statutory penalties and punitive damages for fraud, can they be discharged in bankruptcy?
No. It is not only the actual value of the “money, property, services, or . . . credit” the debtor obtained through fraud that is non-dischargeable in bankruptcy, but also treble “punitive” damages and attorneys fees and costs related to the fraud. This was made clear in a March 25, 1998 decision of the Supreme Court of the United States in Cohen v. de la Cruz. The case involved a landlord who had overcharged his tenants. The trial court found that the landlord had committed “actual fraud” within the meaning of the Bankruptcy Act and that his conduct amounted to an “unconscionable commercial practice” under New Jersey’s Consumer Fraud Act. As a result, the court awarded the tenants treble damages plus reasonable attorney’s fees and costs.