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U.S. bankruptcy code protection will not cover fraudulent debt

The U.S. Supreme Court has ruled that bankruptcy filers cannot avoid debt incurred by another’s fraud. 

The 9-0 ruling, written by Justice Amy Coney Barrett, unanimously rejected Kate Bartenwerfer's bid to use U.S. bankruptcy code protection to eliminate debts on the grounds that she was unaware of fraudulent omissions made by her husband. 

U.S. Supreme Court justices have been skeptical of whether bankruptcy can be used to wipe out debts incurred through fraud, regardless of whether the individual declaring bankruptcy has not themselves committed fraud. 

The recent ruling confirms that debts stemming from fraudulent activity cannot be discharged through bankruptcy proceedings. 

The U.S. Supreme Court on Wednesday ruled that individuals cannot use the bankruptcy process to wipe out debts incurred through fraud even in instances when they were not the ones who personally deceived their creditors.


bankruptcy, supreme court, restructuring & insolvency