Typically, a debtor in chapter 7 lacks standing to appeal an order allowing a claim. According to the Fifth Circuit, however, there is an exception to the general rule when the debtor is an individual and the debt might be declared nondischargeable.

The per curiam, non-precedential opinion on March 7 began with the general proposition that the “person aggrieved” standard for appellate standing is “more exacting” than “traditional constitutional standing.” Ordinarily, a chapter 7 debtor “typically has no concrete interest in how the bankruptcy court divides up the estate,” the opinion says.

In the case at bar, the bankruptcy court had allowed a claim where the creditors had unresolved proceedings to bar discharge or declare the debt nondischargeable. The district court dismissed the debtor’s appeal from the claim allowance order on the theory that the debtor lacked standing.

The Fifth Circuit reversed, because the claim allowance order would have res judicata effect against the debtor were the debt later declared nondischargeable. Therefore, the debtor had a monetary interest in the allowance of the claim and thus possessed standing to appeal.

As an additional ground for finding standing, the appeals court said that a successful appeal from the claim order would end the dischargeability dispute because no claim would survive to be declared nondischargeable.