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Bankruptcy Constitutional Law Litigation

Supreme Court Finds 2017 Bankruptcy Fee Increases Unconstitutional But Leaves Remedy Unclear

The Supreme Court concluded that because the 2017 amendments exempted debtors located in two States, it was not “uniform” as it did not apply equally to all debtors regardless of where they were situated and, therefore, the statute was unconstitutional.

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In June, the U.S. Supreme Court, by unanimous decision, resolved a split amongst five circuits and determined that a 2017 Congressional amendment to the bankruptcy fee provisions was unconstitutional as violating the Bankruptcy Clause of the US. Constitution. See, Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022). The Bankruptcy Clause of the U.S. Constitution empowers Congress to establish “uniform laws on the subject of Bankruptcies throughout the United States.” U.S. Const. art. I, §8, cl. 4. The meaning of “uniform” became the subject of debate in the Siegel case. The Supreme Court concluded that because the 2017 amendments exempted debtors located in two States, it was not “uniform” as it did not apply equally to all debtors regardless of where they were situated and, therefore, the statute was unconstitutional. Siegel, 142 S. Ct. 1770 (2022). A discussion of the Supreme Court’s decision in Siegel, and relevant factual backdrop precipitating such decision, appears below.

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