Two bad things happen to the same person all the time.
Somebody gets hurt on a job site, can’t work, falls behind, and files bankruptcy. Or somebody files bankruptcy first and gets rear-ended on I-94 four months into a Chapter 13 plan. Nothing exotic about either one. That’s just the order things go in a bad year.
And it sets a trap that’s quietly wiped out a lot of legitimate personal injury claims. The debtor didn’t list the lawsuit on the bankruptcy schedules, and a court later held that the omission killed the lawsuit entirely.
On June 11, 2026, the Supreme Court unanimously narrowed that trap.
The doctrine
When you file bankruptcy, 11 U.S.C. § 521(a)(1) requires you to file “a list of creditors” and “a schedule of assets and liabilities.” A legal claim you have against somebody else is an asset. A car-accident claim, an employment claim, a credit-reporting claim, a construction-defect claim — they’re all assets, and they all have to be scheduled. Property acquired after a Chapter 13 filing generally becomes part of the estate under 11 U.S.C. § 1306(a), and most courts treat the debtor as having a continuing duty to disclose claims that come up during the plan. Keathley itself expressly declined to decide whether that duty exists, noting a split. You don’t need to know how that comes out. Disclose.
If a debtor leaves a claim off, says nothing to the bankruptcy court, gets a discharge, and then goes after the claim in another court, defendants raise judicial estoppel: you told one federal court you had no such asset, and now you’re telling another federal court you do. Pick one.
There’s a good reason for the doctrine. It’s aimed at debtors who hide an asset from their creditors and then cash it in themselves.
The trouble is how mechanically some courts applied it.
What Keathley held
Thomas Keathley had a pending Chapter 13 case and a personal injury claim he didn’t disclose. The Fifth Circuit used a two-factor test. Did the debtor know the underlying facts? Did the debtor have a motive to conceal? Yes to both, and judicial estoppel barred the claim.
The Supreme Court vacated, unanimously, in an opinion by Justice Jackson.
The Court’s main objection was that the Fifth Circuit’s test was, in its words, “simultaneously too rigid and too broad.” Too rigid, because it shut out all the other evidence on whether an omission was really inadvertent. Too broad, because the “motive to conceal” factor is met in essentially every case. Every debtor always has some theoretical money reason to keep an asset out of the estate. A test that’s always met isn’t a filter. It’s a rubber stamp.
Here’s how the Court framed it:
Judicial estoppel is an “equitable doctrine” intended “to protect the integrity of the judicial process.”
And equity, the Court said, “eschews mechanical rules; it depends on flexibility.” A near-dispositive criterion “is a poor fit for a fair inquiry into whether an omission is actually the result of inadvertence or mistake.”
The new standard is a totality of the circumstances inquiry. Courts have to do a case-by-case equitable analysis that looks at all the relevant facts and circumstances surrounding the omission.
The Minnesota angle: we were already here
Minnesota sits in the Eighth Circuit, and the Eighth Circuit got here twenty years ago.
In Stallings v. Hussmann Corp., 447 F.3d 1041 (8th Cir. 2006), the court expressly rejected the idea that the intent required for judicial estoppel “can be inferred from the mere fact of nondisclosure in a bankruptcy proceeding,” warning that a rule like that would unduly expand the doctrine and shut out claims resting on inadvertent or good-faith inconsistencies. Adopting the Third Circuit’s formulation from Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996), it held that careless or inadvertent disclosures aren’t the same thing as deliberate manipulation. And it treated judicial estoppel as an extraordinary remedy, appropriate only when a party’s inconsistent behavior would produce a miscarriage of justice.
Don’t push that too far, though. Keathley didn’t adopt, endorse, or even discuss the Eighth Circuit’s framework. The Court announced a totality test of its own, and Stallings shows up in the opinion only in a string cite in Justice Thomas’s concurrence, for the unrelated point that every circuit recognizes the doctrine in some form. So don’t go around saying “the Eighth Circuit was vindicated.” What happened is that the Supreme Court has now required, nationwide, the kind of fact-specific inquiry the Eighth Circuit was already doing.
That difference matters here, because the Eighth Circuit hasn’t always applied Stallings gently. In Van Horn v. Martin, 812 F.3d 1180 (8th Cir. 2016), a Chapter 13 debtor who didn’t amend her schedules to disclose a discrimination claim was barred by judicial estoppel, on reasoning that a debtor who gets a right-to-sue letter during a pending bankruptcy “has a motive to conceal”. That’s knowledge-plus-motive reasoning — exactly what Keathley now calls too rigid and too broad. Read straight, Keathley may change Eighth Circuit practice instead of just blessing it, and a Minnesota plaintiff facing this defense is likely better off today than the “we were already here” framing suggests.
If you’re a Minnesota plaintiff whose claim got hit with a judicial-estoppel defense, that’s meaningful. If your claim is in federal court under diversity jurisdiction, against a defendant that would rather litigate your schedules than the collision, it’s more meaningful still.
What Keathley flatly doesn’t do
It doesn’t make the disclosure duty optional. Read that sentence twice.
Keathley changes the standard for deciding whether an omission was inadvertent. It doesn’t create a right to leave things off. A debtor who deliberately hides a valuable claim from creditors still loses it, and may face consequences well beyond losing it. And even a fully inadvertent omission causes real problems that survive this decision:
- The claim may not be yours to bring. In Chapter 7, a pre-petition legal claim generally becomes property of the bankruptcy estate. The trustee — not the debtor — may be the one with standing to pursue or settle it. Winning the judicial-estoppel fight doesn’t answer who owns the claim.
- You’ll litigate the omission before you litigate the injury. Depositions about your bankruptcy paperwork, your communications with your bankruptcy lawyer, and what you knew and when. That’s expensive, invasive, and completely avoidable.
- The fix is usually available and usually cheap. Bankruptcy schedules can generally be amended. Amending promptly, on your own, before anybody raises it, is the right thing to do. Under a totality-of-the-circumstances test, it’s also powerful evidence of exactly the inadvertence the standard now asks about.
What to do
If you’re in bankruptcy, or were recently, and you have any of the following, tell your bankruptcy lawyer today:
- A car, truck, or motorcycle collision — even one where you have not hired anyone
- A workplace injury, or a dog bite, or a slip and fall
- An unresolved dispute with an employer over wages, discrimination, or termination
- A credit reporting error you disputed and that was not corrected
- Money someone owes you, a lawsuit you filed, or a claim you were “thinking about”
- An inheritance or an insurance claim that has not paid out
And if you’re already pursuing a claim and a defendant has raised your bankruptcy as a defense, the answer to that motion changed on June 11, 2026. You still have to build the response out of the actual circumstances of the omission. So the sooner somebody pulls that record together, the better it looks.
Why this matters beyond bankruptcy
There’s a reason a doctrine built to punish manipulation kept catching people who weren’t manipulating anything.
The people caught between these two systems are, almost by definition, having the worst year of their lives. They’re filling out a hundred pages of forms about property they’ve never had to inventory before, often with a lawyer they can barely afford and don’t see much. Asking whether they had a “motive to conceal” tells you nothing. Of course there was a motive. There’s always a motive. The question is whether they acted on it.
Now the Supreme Court has told courts they actually have to ask.
If you’re in bankruptcy or just out of it and you have an injury or consumer claim — or a defendant has raised your bankruptcy filing as a bar to your case — the record on the omission is what decides it. Send us a message or call 612-470-6529.
Sources: Keathley v. Buddy Ayers Construction, Inc., 608 U. S. 647 (2026) (Jackson, J.), No. 25–6, argued March 24, 2026, decided June 11, 2026 (vacated and remanded); Stallings v. Hussmann Corp., 447 F.3d 1041 (8th Cir. 2006); Van Horn v. Martin, 812 F.3d 1180 (8th Cir. 2016); 11 U.S.C. § 521(a)(1). This article is general commentary on published decisions and federal statutes, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular claim is property of a bankruptcy estate, and whether an omission was inadvertent, depends entirely on the facts of the case. No outcome is promised or implied.