United StatesA debtor’s own fraud or theft would block debt relief
For the listed deception and theft grounds, a debt could be kept from being erased in individual bankruptcy only for conduct by the debtor.
What it does
False pretenses, false claims, or actual fraud would keep a debt from being erased only when the debtor personally acted. A separate rule would also require the debtor to use the statement at issue.
Debts for fraud or misuse of entrusted funds while serving in a position of trust, as well as embezzlement or theft, would not be erased when the debtor personally committed them.
Argument forPeople might keep bankruptcy relief for debts tied to another person’s fraud or theft because these rules require their own conduct.
Argument againstCreditors might have a harder time keeping debts active if they cannot prove the debtor personally carried out the fraud or theft.
More detail
Fraud-based reasons for keeping a debt from being erased would require the debtor’s own conduct. The rule covers false pretenses used by the debtor, false claims made by the debtor, and actual fraud committed by the debtor. A separate statement rule would require use by the debtor. This clause would not cover a statement about the financial condition of the debtor or a person or organization closely tied to the debtor.
A person could not erase debts for their own embezzlement or theft, or for fraud or misuse of funds while serving in a position of trust. The person seeking bankruptcy relief must have committed the listed act.
Where do you stand?
Choose your position
Tell your reps
Take a position to see your representatives and ways to contact them.
Where it stands
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Oct 5Introduced in HouseLatest
- Oct 5Referred to the House Committee on the Judiciary.Introduced
Consumer ProtectionPublic SafetyAI & Privacy