Angela Littwin (University of Texas at Austin School of Law), Adrienne Adams (Michigan State University), and Angie Kennedy (Michigan State University) have recently posted to SSRN their paper, Bartenwerfer v. Buckley and Coerced Debt. Here is the abstract:
In Bartenwerfer v. Buckley, the Supreme Court held that 11 U.S.C. § 523(a)(2) barred a spouse who did not commit fraud from discharging a debt that her husband obtained by fraud. This holding raises concerns that coerced debts forced on an abused partner will become nondischargeable. Coerced debt occurs when the abusive partner in a relationship characterized by domestic violence uses fraud or coercion to incur debt in an intimate partner’s name. The Supreme Court’s holding that “§ 523(a)(2)(A) turns on how the money was obtained, not who committed fraud to obtain it” is particularly concerning because each coerced debt actually has two victims: the victim whose credit was used to incur the debt and the creditor who provided funds or services. Bartenwerfer thus raises the possibility that creditors could prevent victims of coerced debt from discharging these debts due to the abusive partner’s fraud. A close reading of Bartenwerfer, however, reveals crucial limits that may protect spousal victims of coerced debt. In sum, the innocent spouse and the fraudster must have a business relationship that can impute fraud under applicable non-bankruptcy law. This article argues that barring discharge is not mandatory under Bartenwerfer and the precedent it embraced. It also makes the normative case for allowing discharge of coerced debts using data from the first in-depth study of coerced debt.