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The Supreme Court will hear a dispute stemming from a San Francisco house-flipping project gone wrong that is expected to determine whether an innocent bankruptcy debtor can wipe out judgments for a fraud carried out by someone else, WSJ Pro Bankruptcy reported. The justices elected Monday to hear the case of a married couple who sold a house in 2008 for $2 million without disclosing water leaks and other problems to the buyer. The couple later filed for personal bankruptcy, which the wife has sought to use to discharge the buyer’s judgment against her, saying her husband was primarily responsible for the renovation and that she wasn’t aware of the problems at the time of the sale. The case concerns who is eligible for a fresh financial start through bankruptcy and who isn’t. Although consumers can use bankruptcy to leave overwhelming credit card or medical bills behind, Congress doesn’t let debtors use the process to get out of paying creditors whom they have defrauded. The question the Supreme Court chose to review focuses on whether a debtor can discharge a debt arising from a partner’s fraudulent act that they are jointly liable for. Lawyers for the woman, Kate Bartenwerfer, said in a December court filing the issue is broader than her case and potentially affects joint transactions or partnerships “involving married persons and couples, even the sale of a family home.” The Ninth U.S. Circuit Court of Appeals ruled against Ms. Bartenwerfer following earlier trials in California state court and bankruptcy court. The appeals court ruled last August that Ms. Bartenwerfer’s debt isn’t eligible for a bankruptcy discharge “regardless of her knowledge of the fraud.”