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119-hr-10724119th CongressWALLET

To amend title 11, United States Code, to clarify the rules for the exceptions to the discharge of the debt of an individual debtor, and for other purposes.

Sponsored By: Representative Correa, J. Luis [D-CA-46]

Introduced

Summary

Tightens non-dischargeability for debtor fraud. This bill would clarify that debts an individual owes because of false pretenses, false representations, or actual fraud are not dischargeable in bankruptcy, specify that the debtor's own use of assets or funds can trigger non-dischargeability, and add fraud or defalcation while acting as a fiduciary, embezzlement, and larceny to the list of nondischargeable acts.

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  • Individual debtors: Makes it harder for someone to erase debts they obtained through false pretenses, false representations, or actual fraud.
  • Creditors and victims: Expands the types of wrongdoing courts will treat as nondischargeable, increasing the chances creditors or victims recover from bankruptcy estates.
  • Fiduciaries and insiders: Clarifies that fraud or defalcation in a fiduciary role, embezzlement, and larceny by the debtor are explicitly nondischargeable, and ties nondischargeability to the debtor's use of funds.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 0 benefits, 0 costs, 1 mixed.

Tighter rules on discharging fraud debts

If enacted, this bill would clarify when debts from fraud or theft by an individual debtor would not be discharged in bankruptcy. It would say a debt is non-dischargeable when the debtor used false pretenses, made a false representation, or committed actual fraud, but the rule would not apply to statements about the debtor’s or an insider’s financial condition. It would also say a written financial statement counts only if the debtor used it. Finally, it would make debts non-dischargeable when the debtor committed fraud or defalcation as a fiduciary, embezzlement, or larceny.

Sponsors & CoSponsors

Sponsor

Correa, J. Luis [D-CA-46]

CA • D

Cosponsors

  • Rep. Lee, Laurel M. [R-FL-15]

    FL • R

    Sponsored 10/5/2026

Roll Call Votes

No roll call votes available for this bill.

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