7th Circuit Cases Updates

On May 16, 2016, the United States Supreme Court in Husky International Electronics v. Ritz held that the phrase “actual fraud” under section 523(a)(2)(A) of the Bankruptcy Code may include fraudulent transfer schemes that were effectuated without a false representation.  Section 523(a)(2)(A) provides that an individual debtor will not be discharged from certain debts to the extent that those debts were obtained by false pretenses, false representations or actual fraud.  The Court’s decision in Husky resolved a conflict in the interpretation of actual fraud under section 523(a)(2)(A) between the Fifth and Seventh Circuits.
Continue Reading Supreme Court Holds That “Actual Fraud” Under Section 523(a)(2)(A) of the Bankruptcy Code May Include Fraudulent Transfers That Occur Without False Representations

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 debtor. But two recent developments may signal that this bedrock principle is eroding – i.e., (i) the Seventh Circuit’s affirmance of a bankruptcy court’s ruling that an impoverished but otherwise healthy woman’s student loan debts were dischargeable, and (ii) the recent introduction of a Congressional bill that would make it easier to discharge privately issued student loan debt.
Continue Reading Student Loans: Nondischargeability Questioned in Seventh Circuit and Beyond