In 2023, the U.S. Supreme Court resolved a decades-long debate regarding the ability to discharge liability imputed upon a debtor for another person's fraudulent conduct. In Bartenwerfer v. Buckley, the Court held that the Bankruptcy Code prohibits discharge of any fraud liability-even when the debtor did not participate in the fraud but was married to and engaged in business with the person who did.

Scholars have long recognized the challenge of this type of business-partner imputed fraud liability in the context of a marital relationship. Creating a partnership merely requires intent of the parties to engage in business together, without any
required documentation or filing with the state. As such, determination of the existence of a partnership relies on a case-by-case determination to discern the true intention of the putative business partners. The marital context adds a new challenge to this determination, as couples frequently share money and help each other in ways that might be construed as a business partnership. The Bartenwerfer decision makes the determination more fraught with consequences, since the
non-defrauding business partner faces not only liability under state law but liability that cannot be discharged even in the last-resort option of bankruptcy.

Bankruptcy courts historically look at the state law standard for creation of a partnership, but the courts lack a clear set of guidelines to provide structure to the partnership determination. The tax courts and the Internal Revenue Service have faced similar issues in determining the tax liabilities and social security eligibility of spouses potentially engaged in business together, as well as in determining the existence of a business for tax-purposes. Though rooted in tax issues, the cases
start at the same place as any determination of a partnership: the intent of the parties to engage in business together. At the heart of these tax cases lie a trilogy of Supreme Court decisions from the mid-twentieth century and a more modern Supreme Court case. These decisions and rules outline factors to consider in finding the existence of a business, and they provide a more detailed framework for bankruptcy courts to determine the existence of a partnership among married couples or other family members. This article considers these cases to build a framework for determining liability and non-dischargeability in bankruptcy cases.

The bankruptcy system seeks to strike a balance between promoting a fresh start for a debtor in financial distress and a fair and equitable distribution of the debtor's assets to its creditors.' But among creditors, equitable does not mean equal, and some creditors enjoy more protection both within and outside of the bankruptcy system. Among the most protected creditors in bankruptcy are those with a prepetition security interest in the debtor's assets, and among the most protected of these secured creditors are those with a lien on the debtor's residential property in a Chapter 13 case. Yet those creditors-ones with a residential lien in Chapter 13-may find themselves losing the protection of that lien in bankruptcy. Lien-stripping may occur in individual cases at any time, but an interest in lien-stripping particularly increases any time the housing market declines, such as when the debts secured by those homes may exceed the value of the collateral itself. While Supreme Court case law denies the ability to undo liens in any Chapter 7 case and in some Chapter 13 cases, the Court still must determine the ability to strip off "wholly unsecured" liens in Chapter 13 cases. The circuit courts overwhelmingly allow such a strip-off, leaving creditors in those cases singularly unprotected.' While previous law review articles and legal scholarship have analyzed this issue,' many did so prior to the most recent Supreme Court decision in 2015, and these articles often consider the impact on strip-off generally. This Article reconsiders the result of that decision and the impact of seemingly inconsistent results, both on Chapter 13 strip-off cases and on Chapter 20 cases," where courts frequently disagree on the appropriate result.

The bankruptcy system seeks to provide debtors with relief from overwhelming debt, while ensuring a fair and equitable distribution to creditors. Though the filing of a bankruptcy petition stays most debt collection efforts and repayment outside of the bankruptcy system, payments made prior to the bankruptcy filing may diminish funds available to distribute to creditors during the bankruptcy case. In order to prevent pre-petition transfers from impacting post-petition distribution within the bankruptcy system, the Bankruptcy Code provides the bankruptcy trustee with the power to avoid various pre-petition transfers and to recover those transfers from the recipient. With regard to one of those potential transfers—preferential transfers—courts regularly find that transfers to fully secured creditors cannot be avoided. However, this conventional wisdom fails to consider how other sections of the Code that allow such creditors to recover additional payments in bankruptcy causes a benefit to those creditors at the expense of others. This article seeks to resolve the lack of congruity between these sections to protect the purposes behind recovery of preferential pre-petition transfers.