Joining the Tenth Circuit, the Ninth Circuit also has held that chapter 13 trustees are not paid their fees when cases are dismissed before confirmation. The identical issue was argued on February 15 before the Second Circuit.
In short order, we’ll have either unanimity or a split of circuits. A split will give rise to an issue worthy of a grant of certiorari by the Supreme Court.
Notably, the Ninth Circuit’s opinion on June 12 adopted reasoning in an amicus brief filed in support of the debtor by the National Consumer Bankruptcy Rights Center and National Association of Consumer Bankruptcy Attorneys.
Although the courts are split on the standards justifying a hardship discharge, incarceration under any formulation does not warrant shedding debt.
As part of the Sarbanes-Oxley Act of 2002, Congress added Section 523(a)(19) to the Bankruptcy Code, which states that a debt is excepted from discharge if it arose from a violation of securities laws.....