Bloomberg Law
April 11, 2018, 4:18 PM

Justices Weigh Bankruptcy Fallout of Unkept Pledge to Pay Lawyers

Diane Davis
Diane Davis

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 April 17 to try and sort things out. It’s difficult to predict how the high court will rule between ...

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