Congressman Lou Correa (D-CA), together with Congresswoman Laurel Lee (R-FL), has introduced the bipartisan Bankruptcy Relief for Innocent Partners Act. This legislation aims to ensure that individuals are not burdened with debt resulting from fraud committed solely by their partners. It also seeks to protect survivors of domestic and financial abuse from feeling compelled to stay in dangerous relationships due to financial constraints.

“If you didn’t commit the fraud, you shouldn’t have to carry the debt for the rest of your life,” said Correa. “For a survivor of abuse, that debt can be a chain. Abusers often use debt to control their partners and prevent them from leaving. This bill removes one more chain.”

“No one should be held responsible for debt caused by a partner’s fraud when they neither knew of nor participated in it,” said Laurel Lee. “For victims of domestic or financial abuse, being forced to bear the financial consequences of a partner’s wrongdoing can make an already devastating situation even worse. The Bankruptcy Relief for Innocent Partners Act is a matter of fundamental fairness. It provides meaningful relief for innocent individuals while ensuring that our bankruptcy laws hold those who commit fraud accountable.”

The bill modifies the Bankruptcy Code so that only the person who committed the fraud is barred from discharging the resulting debt. Innocent partners would receive the same fresh start as any other honest filer. Additionally, the bill protects survivors of domestic and financial abuse from being forced to remain in a relationship for financial reasons.

“NACBA strongly endorses this legislation because individuals can be held legally responsible for another person’s fraud without having committed fraud themselves. The Bartenwerfer case blurred this crucial distinction in bankruptcy law, resulting in innocent debtors being burdened for life with debt arising from misconduct they neither knew of nor could prevent. This bill restores a simple principle: the serious consequence of nondischargeability for fraud should attach to the person who committed the fraud. It does not excuse wrongdoing or remove anyone’s underlying liability; it merely ensures that an honest debtor is not denied a fresh start because of someone else’s actions,” said Richard Nemeth, President of the National Association of Consumer Bankruptcy Attorneys (NACBA).

“Ninety-nine percent of domestic violence survivors experience economic abuse, and half endure coerced debt. Aside from the direct costs, coerced debt creates wider economic repercussions by damaging credit ratings and hindering survivors’ access to housing, employment, and other essential resources for safety. The Bankruptcy Relief for Innocent Partners Act would provide vital relief to domestic violence survivors burdened with debt through no fault of their own. By addressing the issue of fraud, this legislation will remove a significant barrier to bankruptcy relief, offering a path to economic security and safety for domestic violence survivors across the country,” said Erika Sussman, Founder & Executive Director of the Center for Survivor Agency and Justice.

For more details, view the bill text here.

Background
In the case of *Bartenwerfer v. Buckley*, a couple operated a house-flipping business together, and one partner committed fraud without the other’s knowledge. After filing for bankruptcy, the Supreme Court ruled that the existing law did not permit the innocent partner to discharge the debt related to the fraud.

This issue is particularly urgent in abusive relationships, where half of domestic abuse survivors report experiencing “coerced debt,” a situation where abusers use debt to maintain control and restrict their partners’ financial resources.