Although the basic premise behind personal bankruptcy is relatively easy to comprehend, the legal framework supporting this method of debt relief is anything but simple. Michigan residents who have successfully completed bankruptcy probably know this to be true.
For nearly 150 years, one concept in bankruptcy has remained unclear. The bankruptcy code provides that debts can be discharged unless the filing party demonstrates "fraud or defalcation." The former legal issue is pretty well understood, but "defalcation" has long been a nebulous concept.