Two cardholders say Goldman Sachs kept chasing their debts after they filed for bankruptcy, and the Supreme Court will decide whether a clause in their card contracts can move that fight out of bankruptcy court.
Story Snapshot
- The Supreme Court agreed to hear Goldman Sachs Bank USA v. Brown, an appeal from the bank.
- Two borrowers say Goldman kept seeking payment after they filed for bankruptcy, when collection is supposed to stop.
- Goldman says the card agreements require those claims to go to arbitration, a private process with no judge.
- The ruling will decide where cardholders in bankruptcy can bring this kind of claim.
What The Supreme Court Agreed To Decide
On Friday, November 6, the Supreme Court added the case to its list for arguments this term. The justices will decide whether and when a bankruptcy judge can refuse to send a dispute to arbitration, even though the card contract calls for it. Goldman asked for the review after a federal appeals court ruled against it on March 18, 2026.
Arbitration is a private way to settle a dispute. Instead of a judge, a hired referee called an arbitrator hears both sides and makes the call, usually outside a public courtroom and with little chance to appeal. Many credit card contracts include an arbitration clause.
Goldman says a federal law, the Federal Arbitration Act, requires courts to enforce those clauses. The bank points to a 2006 ruling by the appeals court based in New York, which sent a similar claim to arbitration. In its appeal, Goldman called the stakes “enormous” and said the lower court ruling puts the enforceability of many consumer credit contracts at risk.
Why Bankruptcy Judges Kept The Case
Rhea Brown filed for bankruptcy in June 2023, and Gregory Maze filed in November 2023. Both listed credit card debts owed to Goldman. A bankruptcy filing sets off the automatic stay, an order that bars lenders from trying to collect while the case is open. Brown says Goldman kept contacting her for more than six months after she told the bank about the stay, and Maze says the contacts went on for more than three months.
The two sued Goldman inside their bankruptcy case, using a part of the law that lets people seek damages when a lender willfully breaks the stay. Goldman asked the court to send the claims to arbitration. The bankruptcy judge in Virginia refused, finding a direct clash between arbitration law and bankruptcy law. The judge called the automatic stay a fundamental protection for people in bankruptcy and kept the case. A federal district judge agreed, and so did the appeals court in a 2-1 vote.
The borrowers argue that the stay exists to keep every fight over a debtor’s money in one court. They say sending these claims to an arbitrator would weaken the judge’s power to watch over and enforce the stay.
What Is At Stake For Cardholders
If Goldman wins, a cardholder in bankruptcy who says a lender kept calling could be sent to a private arbitrator to seek damages, under the terms of the card contract. If the borrowers win, the bankruptcy judge who oversees the case can hear that claim in open court.
Either way, the stay itself still applies. According to the borrowers’ brief, Goldman agrees that a card contract cannot take away a bankruptcy judge’s power to enforce the stay through contempt, which is a court’s power to punish anyone who defies its orders. The fight is over the separate claim for money that the law gives to the borrower.
What Goldman Says
Goldman argues that the arbitration law must be followed unless it truly clashes with another law, and that sending this damages claim to an arbitrator creates no such clash. It also says federal appeals courts have split on the question, so the country needs one clear rule.
In a separate step in September, the bankruptcy judge dismissed the borrowers’ complaint because it did not show enough actual money harm, and let them file it again. According to a filing by the borrowers, the same judge said there can be “little debate” that Goldman willfully violated the stay.
What Comes Next And What To Watch
The justices discussed Goldman’s request at four conferences in a row before agreeing to hear it. Arguments are likely in 2027, with a decision expected by late June or early July 2027. One point to watch is whether the justices treat this damages claim as a private dispute, as Goldman says, or as a way to enforce a court order, as the borrowers say.
Bottom Line For Readers
Bankruptcy law promises a pause on collection. Arbitration law promises that courts will honor private contracts. The Supreme Court will decide which promise controls when the two meet, and the answer will reach anyone who carries a credit card with an arbitration clause and ever needs bankruptcy protection.
Sources:
scotusblog.com, supremecourt.gov, supremecourt.gov, govinfo.gov, vawb.uscourts.gov, supremecourt.gov
