Exceptions to discharge under Section 523 of the Bankruptcy Code Justifiable or Reasonable Reliance.

Was your reliance justifiable or reasonable when lending money to a dishonest debtor ? later ends up in bankruptcy. We are going to talk about bankruptcy adversaries for exceptions to discharge.

The case concerned several novel issues of law, including the standard for “justifiable” or “reasonable” reliance under §523(a)(2) of the Bankruptcy Code.

There are Exceptions to Bankruptcy Discharge under Section 523 –
Bankruptcy discharge is the value most debtors that petition for relief under the Bankruptcy Code are after. The discharge of their debts can wipe away thousands or millions of dollars of debt holding down a debtor in order to give him or her a fresh start.

But not all debtors are honest but unlucky – some are lying about their debts, which is why you can file an action to except certain debts, usually obtained fraudulently, from discharge. Section § 523(a)(2) of the Code is the authority for such adversary proceedings, which provides - that means says to non-lawyers, in relevant part:

(A) A Discharge Under Section 727, 1141, 1192, 1228(A), 1228(B), Or 1328(B) Of This Title Does Not Discharge An Individual Debtor From Any Debt—
(2) For Money, Property, Services, Or An Extension, Renewal, Or Refinancing Of Credit, To The Extent Obtained By—
(A) False Pretenses, A False Representation, Or Actual Fraud, Other Than A Statement Respecting The Debtor’s Or An Insider’s Financial Condition;

(B) Use Of A Statement In Writing—
(I) That Is Materially False;
(Ii) Respecting The Debtor’s Or An Insider’s Financial Condition;
(Iii) On Which The Creditor To Whom The Debtor Is Liable For Such Money, Property, Services, Or Credit Reasonably Relied; And
(Iv) That The Debtor Caused To Be Made Or Published With Intent To Deceive[.]

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