In April, the Seventh Circuit Court of Appeals split with the Fifth Circuit – and other lower courts – on an issue at the intersection of bankruptcy and trusts and estate law. InIn re Clark, 714 F.3d 559 (7th Cir. 2013), the court held that funds in an individual retirement account inherited from someone other than the bankrupt debtor’s spouse are not “retirement funds” within the meaning of the United States Bankruptcy Code and are, therefore, available to pay creditors of the debtor-heir.

In a victory for secured lenders, the U.S. Supreme Court has ruled that a bankruptcy court may not extinguish a junior lien on a Chapter 7 debtor's property, even though the collateral has no value above the senior debt.