Supreme Court to Weigh Debt Collection Penalties Post-Bankruptcy

The Supreme Court will hear arguments April 24 on whether creditors’ good faith attempts to collect on post-bankruptcy debt can be subject to court penalties for their actions, a case that has triggered debtors’ concern about collection limits in the U.S.

At issue in Taggart v. Lorenzen is a federal appeals court decision that held a real estate developer who relied on a state court’s approval—later reversed—to collect attorneys’ fees post-bankruptcy can’t be sanctioned for violating a bankruptcy court order wiping out debt. The U.S. Court of Appeals for the Ninth Circuit’s ruling has worried debtors because it differed from ...