Legislation: H.R. 10724: Bipartisan Bill Would Overturn Bartenwerfer and Protect Innocent Debtors from Another Person’s Fraud

By Ed Boltz, 20 October, 2026

H.R. 10724 — Bankruptcy Relief for Innocent Partners Act 119th Congress | Introduced October 5, 2026 Sponsors: Rep. Lou Correa (D-CA) and Rep. Laurel Lee (R-FL)

Bill Text and Status — Congress.gov

Summary

Representatives Lou Correa (D-CA) and Laurel Lee (R-FL) have introduced the bipartisan Bankruptcy Relief for Innocent Partners Act, H.R. 10724, which would effectively overturn the Supreme Court’s decision in Bartenwerfer v. Buckley, 598 U.S. 69 (2023).

In Bartenwerfer, the Supreme Court held that a debtor could be denied a discharge under 11 U.S.C. § 523(a)(2)(A) for fraud committed by her husband and business partner, even though she neither committed nor knew about the fraud.

H.R. 10724 would amend §§ 523(a)(2) and (a)(4) to clarify that exceptions to discharge for fraud, false pretenses, false representations, fiduciary fraud or defalcation, embezzlement, and larceny apply only when the specified misconduct was committed by the debtor.

The legislation would not eliminate the underlying debt or prevent creditors from pursuing those who committed fraud. It would instead prevent an innocent debtor from being denied a bankruptcy discharge because of another person's misconduct.

The National Association of Consumer Bankruptcy Attorneys (NACBA) has strongly endorsed the legislation.

NACBA President Richard Nemeth explained:

A person can be held legally responsible for someone else’s fraud without having committed fraud themselves. Bartenwerfer blurred that critical distinction in bankruptcy, allowing an innocent debtor to be saddled for life with a debt arising from misconduct they neither knew about nor could prevent. This bill would restore a simple rule: the extraordinary consequence of nondischargeability for fraud should follow the person who committed the fraud. It does not excuse wrongdoing or eliminate anyone’s underlying liability—it ensures that an honest debtor is not denied a fresh start because of someone else’s misconduct. We're grateful to Representatives Correa and Lee and colleagues on both sides of the aisle for taking it up.

Commentary

The fundamental problem with Bartenwerfer is that it conflates two very different questions: whether someone is legally liable for another person's fraud and whether that innocent person should be permanently denied a bankruptcy discharge.

The distinction is particularly important for victims of domestic violence and financial abuse.

As the National Consumer Bankruptcy Rights Center (NCBRC) and Professor Angela Littwin argued in their Supreme Court amicus brief, abusive partners frequently incur debts in their victims' names through fraud, threats, intimidation, or coercion. This coerced debt can leave survivors with ruined credit and overwhelming financial obligations, making it difficult to escape abusive relationships or rebuild their lives afterward.

Research cited in the amicus brief found that more than half of surveyed domestic violence hotline callers reported debts incurred in their names through coercive or fraudulent transactions by intimate partners.

Professors Angela Littwin, Adrienne Adams, and Angie Kennedy subsequently examined these issues in their article, Bartenwerfer v. Buckley and Coerced Debt, published in the American Bankruptcy Law Journal.

As discussed in my earlier review of that article, Bartenwerfer is narrower than it might initially appear. Creditors must still establish a legitimate basis under applicable partnership or agency law for imputing one person's fraud to another. Marriage alone does not establish that relationship.

Nonetheless, that protection requires factual investigation and potentially expensive litigation. Victims of domestic abuse, already facing substantial financial and personal disadvantages, should not have to litigate complex agency and partnership questions merely to establish that they did not commit fraud.

H.R. 10724 would eliminate that problem for the specified discharge exceptions by making the debtor's own misconduct determinative.

The legislation would not resolve every form of coerced debt, nor would it necessarily invalidate debts fraudulently incurred in a victim's name. But it would prevent the particularly perverse result of a survivor being denied bankruptcy relief because of fraud committed by the very person who abused them.

This is a modest but important correction to the Bankruptcy Code, restoring the distinction between civil liability and personal wrongdoing while preserving the fresh start for honest but unfortunate debtors.

It is also encouraging to see Representatives Correa and Lee working across party lines on consumer bankruptcy legislation.

As NACBA's Legislative Co-Chair, I strongly support this legislation and hope that Congress will move promptly toward its passage.