Cite as: 538 U. S. 314 (2003)
Syllabus
in state court, id., at 131, it did not prevent the Bankruptcy Court from looking beyond the state-court record and the documents terminating the state-court proceeding to decide whether the debt was a debt for money obtained by fraud, id., at 138-139. As a matter of logic, Brown's holding means that the Fourth Circuit's novation theory cannot be right. If reducing a fraud claim to settlement definitively changed the nature of the debt for dischargeability purposes, the nature of the debt in Brown would have changed similarly, thereby rendering that debt dischargeable. This Court's instruction that the Bankruptcy Court could "weigh all the evidence," id., at 138, would have been pointless, as there would have been nothing for the court to examine. Moreover, the Court's statement in Brown that "the mere fact that a conscientious creditor has previously reduced his claim to judgment should not bar further inquiry into the true nature of the debt," ibid., strongly favors the Archers' position. Finally, Brown's basic reasoning applies here. The Court noted that a change in the Bankruptcy Code's nondischargeability provision indicated that "Congress intended the fullest possible inquiry" to ensure that "all debts arising out of" fraud are "excepted from discharge," no matter their form. Ibid. Congress also intended to allow the determination whether a debt arises out of fraud to take place in bankruptcy court, not to force it to occur earlier in state court when nondischargeability concerns "are not directly in issue and neither party has a full incentive to litigate them." Id., at 134. The only difference between Brown and this case—that the relevant debt here is embodied in a settlement, not in a stipulation and consent judgment—is not determinative, since the dischargeability provision applies to all debts that "aris[e] out of" fraud. Id., at 138. Pp. 318-322.
(b) The Fourth Circuit remains free, on remand, to determine whether Warner's additional arguments were properly raised or preserved, and, if so, to decide them. Pp. 322-323.
283 F. 3d 230, reversed and remanded.
Breyer, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O'Connor, Scalia, Kennedy, Souter, and Ginsburg, JJ., joined. Thomas, J., filed a dissenting opinion, in which Stevens, J., joined, post, p. 323.
Craig Goldblatt argued the cause for petitioners. With him on the briefs was Seth P. Waxman.
Lisa Schiavo Blatt argued the cause for the United States as amicus curiae urging reversal. With her on the brief were Solicitor General Olson, Assistant Attorney General
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