Discharging Trust-Related Claims in Bankruptcy

  • Reno
    Macdonald Fernandez LLP

When a person enters bankruptcy, creditors may be surprised to learn that the debtor does not have money set aside, earmarked and safeguarded for them as if on deposit with a bank. In other words, creditors may (correctly or mistakenly) believe that their assets were held in trust. Accordingly, a creditor may attempt to prove that the debtor held assets in trust for the purpose of rendering a claim nondischargeable under Title 11 of the United States Code (“Bankruptcy Code”) Section 523(a)(4), but it is not easy. In fact, the Supreme Court recently raised the applicable standard of intent in Bullock v. BankChampaign, N.A., 133 S.Ct. 1754 (2013). This article analyzes cases decided after Bullock under a variety of circumstances, specifically: (1) real estate investments; (2) pension funds; and (3) marriage.

Fernandez, R. 2014, "Discharging Trust-Related Claims in Bankruptcy". In: Bar Association of San Francisco, Bar Association of San Francisco, San Francisco, California.


Tags: Discharge, Bankruptcy, Claims, Trust, Section 523(A)(4),