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The Supreme Court's Holding in United Student Aid Funds, Inc. v. Espinosa

Parties challenging a bankruptcy court's final order almost always must take a direct appeal or be forever barred from collateral attack, even when the order contains a clear legal error. Further, when a statute permits a court to act only if certain findings are made or conditions exist, the court...

Yet Another Hanging Paragraph Creates a Taxing Situation

A pair of new opinions suggests that dischargeability of taxes is even more complicated subsequent to BAPCPA. In Matter of McCoy , No. 11-60146 (5th Cir. 1/4/12), which can be found here [ an enhanced version of this opinion is available to lexis.com subscribers ], the Fifth Circuit found that,...

Contumacious Case of Coercion or Merely Rude? Fifth Circuit Judges Debate the Meaning of Section 523(a)(6)

The case of a former corporate officer who demanded to be bought out for an alleged ownership interest and said some really nasty things resulted in a split decision with Fifth Circuit Judges Edith Jones and Catharina Haynes on opposite sides. Matter of Shcolnik , No. 10-20800 (5th Cir. 2/8/12),...

Divided U.S. Supreme Court: Debtors' Farm Sale Tax Liability Not Dischargeable

WASHINGTON, D.C. - (Mealey's) A divided U.S. Supreme Court ruled 5-4 Monday that the federal income tax liability that resulted from a debtor's post-petition farm sale is not "incurred by the estate" for the purposes of 11 U.S. Code Section 503(b); therefore, it is neither collectible...

"Undue Hardship" Under Section 523(a)(8): Can the Debtor's Student Loans Be Discharged?

The provisions of Section 523(a)(8) generally qualified education loans from discharge, unless the denial of a discharge would "impose an undue hardship" on the debtor. Although the words "undue hardship" are not defined in the Bankruptcy Code, two tests have been developed to assist...

Student Loans: Nondischargeability Questioned in Seventh Circuit and Beyond

by Adam McNeile Conventional wisdom says that it is nearly impossible to obtain a discharge of student loan debt in bankruptcy. Indeed, Section 523(a)(8) expressly excepts student loans from discharge, unless the exception of such indebtedness from discharge would impose an undue hardship upon the...

Can My Business In New York Discharge, In Bankruptcy, Employees’ Claims for Unpaid Wages?

In general, yes. Employees’ claims for wages, salaries or commissions earned before the filing of a corporate employer’s bankruptcy petition are dischargeable, unless such pre-petition wage claims are debt for “willful and malicious injury by the debtor [the employer] to another entity...

Ninth Circuit Rules that Withdrawal Liability is Dischargeable in Bankruptcy

Withdrawal liability can arise when an employer ceases to participate or reduces its participation in a multiemployer pension plan, and the plan's assets are not sufficient to meet the benefits that have been promised to participants. What that can mean for employers is a large assessment from the...

Leading Fifth Circuit Cases on Dischargeability in Bankruptcy

This is an article that I did for this year's Advanced Consumer Bankruptcy Course. I have attempted to summarize all of the published decisions on dischargeability from the Supreme Court, Fifth Circuit, Texas District Courts and Texas Bankruptcy Courts (since 2009 for the Bankruptcy Courts). Hopefully...

Dischargeability of Student Loans in Bankruptcy

This is a paper that I wrote for the Commercial Law League Spring Meeting on April 25, 2014. The Commercial Law League, which is a national creditors’ rights organization, is debating whether to support greater dischargeability of student loans. Dischargeability of Student Loans in Bankruptcy...

Recovering Attorneys' Fees in Dischargeability Litigation

A new opinion from Judge Tony Davis answers some interesting questions about recovery of attorneys' fees in dischargeability litigation. Schwertner Backhoe Services, Inc. v. Kirk (In re Kirk) , Adv. No. 11-1239 (Bankr. W.D. Tex. 1/28/15), which can be found here [ an enhanced version of this opinion...

Fifth Circuit Narrows Fraud Dischargeability Claims

Rejecting a Seventh Circuit precedent, the Fifth Circuit has ruled that a non-dischargeability claim under section 523(a)(2)(A) must be based upon a false representation. While bad conduct that does not involve a misrepresentation may be actionable under other sections of the Code, it will not constitute...