Consumer Bankruptcy, Nondischargeability, and Penal Debt

This Article examines the issue of categorically nondischargeable debts in the Bankruptcy Code. These debts are excepted from discharge ostensibly because they indicate that the debtor incurred the debt through some misconduct, there is an important public policy at play that requires the debt to be excepted from discharge, or a discharge of certain state-imposed debts raises federalism concerns. Using penal debt as its lens, this Article critiques these analytical frames, arguing that they do not do much work to help explain why some debts are treated as categorically nondischargeable while others that seem to implicate the same concerns are not treated similarly. The practical consequence of this analytical murkiness is that some debtors may look to the Bankruptcy Code for relief from unmanageable debt while others may not.

Significantly, this arbitrary line-drawing has negative implications for economically and socially disenfranchised communities in which categorically nondischargeable debts may be concentrated. This Article argues that categorical nondischargeability denies relief from unmanageable and socially undesirable debt to those who are least able to bear the burden of ongoing debt.