Document Type

Article

Publication Date

2018

Abstract

A basic purpose of bankruptcy law is to provide a fresh start to the “honest but unfortunate” debtor. The bankruptcy discharge is therefore not generally available for debts incurred by “false pretenses, a false representation, or actual fraud.” However, if the false statement alleged by the creditor is one “respecting the debtor’s or an insider’s financial condition,” it is only nondischargeable if the creditor can show that it was in writing and that the creditor reasonably relied on it. The question in this case is whether a statement by the debtor regarding a single asset, rather than its overall net worth or solvency, is a statement respecting the debtor’s financial condition and, thus, subject to this higher standard for nondischargeability.

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