Saturday, May 29, 2010

Section 523(a)(2)(B) Claims Rejected Because Misrepresentation Not in Writing

In re Schempp, 420 B.R. 637 (Bankr. W.D.Pa 2009). A credit card lender filed a Section 523(a)(2)(B) adversary complaint against a Debtor who took two cash advances on debtor's credit card 165 days before filing bankruptcy. The credit card provider alleged debtor made an implied misrepresentation by taking the cash advances without the intent to repay.

In rejecting the lender's claim, the court noted that Section 523(a)(2)(B) pertains only to money obtained by debtor's use of a statement IN WRITING that is materially false respecting the debtor's or an insider's financial condition. The court's rejection was based upon (a) debtor's representations were NOT in writing; and (b) debtor's representations were NOT respecting debtor's financial condition.

Warmest Regards,
Bob Schaller
Your Bankruptcy Advisor
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