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Effect of out of state statute on dischargeability when debtor files
A North Dakota state statute (8th Circuit) says "The personal liability of
any person as provided in this section survives dissolution,reorganization,
bankruptcy, receivership, or assignment for the benefit of creditors. For
the purposes of this section, all wages paid by the corporation or limited
liability company must be considered earned from any person determined to
be personally liable."
The 8th Circuit has held such debts subject to this statute (such as work
comp insurance premiums) to be nondischargeable under this statute as
"excise taxes".
The 9th Circuit holds the opposite with respect to such work comp premium
debts and does not hold them to be "excise taxes" or nondischargeable.
If a Debtor living in the 9th Circuit incurs such a debt in the 8th Circuit
because they have a business there (work comp premiums), will the 9th
Circuit bk court apply the ND statute and find the debt nondischargeable in
accord with the 8th Circuit's interpretation? Or will they apply their own
rules? Does BK law in the 9th Circuit preempt this state statute? Is there
such thing as an "ipso facto statute" that is unenforceable in bankruptcy?
Holly Roark
Certified Bankruptcy Specialist*
*and Sports Lawyer*
holly@roarklawoffices.com **primary email address**
www.roarklawoffices.com
*Central District of California & District of Idaho* - Consumer Bankruptcy
Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067
T (310) 553-2600; F (310) 553-2601
*By State Bar of California Board of Legal Specialization
A North Dakota state statute (8th Circuit) says "The personal liability of any person as provided in this section survives dissolution,reorganization, bankruptcy, receivership, or assignment for the benefit of creditors. For the purposes of this section, all wages paid by the corporation or limited liability company must be considered earned from any person determined to be personally liable."The 8th Circuit has held such debts subject to this statute (such as work comp insurance premiums) to be nondischargeable under this statute as "excise taxes".The 9th Circuit holds the opposite with respect to such work comp premium debts and does not hold them to be "excise taxes" or nondischargeable.If a Debtor living in the 9th Circuit incurs such a debt in the 8th Circuit because they have a business there (work comp premiums), will the 9th Circuit bk court apply the ND statute and find the debt nondischargeable in accord with the 8th Circuit's interpretation? Or will they apply their own rules? Does BK law in the 9th Circuit preempt this state statute? Is there such thing as an "ipso facto statute" that is unenforceable in bankruptcy?Holly RoarkCertified Bankruptcy Specialist*and Sports Lawyer
holly@roarklawoffices.com**primary email address**
www.roarklawoffices.com
Central District of California & District of Idaho - Consumer Bankruptcy Attorney
1875 Century Park East, Suite 600 Los Angeles, CA 90067T (310) 553-2600; F (310) 553-2601
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