U.S. law for centuries has distinguished between a “fraudulent debtor” and an “honest but unfortunate” one, and refused to allow debts accumulated through fraud to be wiped out in bankruptcy. But what happens when that fraud involves a single asset claim that isn’t in writing? How much weight in relation to a debtor’s finances should that get in bankruptcy, and can that debt still be discharged? These questions have split the circuit courts, and the U.S. Supreme Court will hear arguments on April 17 in Lamar, Archer & Cofrin LLP v. Appling, 16-1215, to try and sort things out, according to a Bloomberg Law analysis. It’s difficult to predict how the high court will rule between now and June in its third bankruptcy case of the 2017 term. But the case has “widespread importance” for potentially millions of chapter 7 debtors because of its potential to deny them a discharge and change the law in many jurisdictions, according to an amicus brief filed on behalf of retired Bankruptcy Judge Eugene Wedoff and a group of law professors. The bankruptcy discharge “goes to the very heart of bankruptcy law,” and is an essential aspect of one’s financial and personal ‘liberty,'” Wedoff and the law professors said. Read more.
For further analysis of Lamar, Archer & Cofrin LLP v. Appling, including analysis by ABI's Bill Rochelle and to read filings in the case, please click here.
