11 U.S.C. § 523

Section 523(a)(2)(B) requires reasonable reliance on a financial statement and intent to deceive for the debt to be excepted from discharge.

First National Bank Dayton v. Breen (In Re Breen) · filed 1981-09-11(a)(2)(B)

(1) The Bank did not reasonably rely on the statement. 11 U.S.C. § 523(a)(2)(B)(iii). (2) The Bank did not sustain the burden of proof that there was an intent to deceive. 11 U.S.C. § 523(a)(2)(B)(iv).

Section 523(a)(2)(B) requires the creditor to prove each element of the written financial statement exception to discharge.

Waterbury Connecticut Teachers Federal Credit Union v. Ciampi (In Re Ciampi) · filed 1981-10-02(a)(2)(B)

As stated above, the plaintiff in this adversary proceeding failed to sustain the burden of proving any of the elements of section 523(a)(2)(B) although he had the duty to prove each. Accordingly, judgment is hereby entered in favor of the defendant and the debt is discharged.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive the creditor when making a false written financial statement, even if the creditor reasonably relied on it.

American Bank & Trust Co. of Pa. v. Drewett (In Re Drewett) · filed 1981-09-02(a)(2)(B)

The Bank has not shown that the debtor’s valuation of his furniture and fixtures, though false and reasonably relied upon by the Bank, was made with the intent to deceive the Bank at the time it was made. We conclude that in fact the statement was not made with the intent to deceive, and for that reason, the debt to the Bank is dis-chargeable.

Section 523(a)(2) makes debt for credit obtained through an intentionally false written financial statement nondischargeable when the creditor reasonably relied on it.

Central Finance Co. v. Carroll (In Re Carroll) · filed 1982-01-06(a)(2)

The financial statement given by the defendant was materially false in not disclosing the total liabilities for the defendant. The defendant does not dispute the fact that she intentionally misrepresented to the plaintiff her financial liabilities. ... The plaintiff reasonably relied upon the statement given by the defendant. ... The amount of money loaned to Ms. Phillips on December 15, 1980, $349.92, together with interest thereon, constitutes a nondischargeable debt under 11 U.S.C. § 523(a)(2). The remainder of the debt is dischargeable.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written statement about financial condition on which the creditor reasonably relied and that the debtor made or published with intent to deceive.

Investors Consumer Corp. v. Goff (In Re Goff) · filed 1982-01-27(a)(2)(B)

Each of the elements of section 523(a) must be proved. Thus, a creditor must prove that the debt was obtained by the use of a statement in writing (1) that is materially false; (2) respecting the debtor’s financial condition; (3) on which the creditor reasonably relied in extending money, property, services or credit; (4) that the debtor caused to be made or published with intent to deceive. ... It is the conclusion of this Court that the debtor’s representations to the plaintiff were materially false and the plaintiff, after further inquiry as to Goff’s financial condition, relied upon the misrepresentations. Debtor’s intent to defraud the plaintiff is further evidenced by the fact that at the time he obtained the loan he was insolvent and was unable to pay his obligations as they matured. ... WHEREFORE, IT IS ORDERED AND ADJUDGED that the debt owed to plaintiff in the amount of Nine Hundred One and 97/100 Dollars ($901.97) be and is non-dischargeable.

Section 523(a)(2)(B)(iii) requires a creditor to rely reasonably on a debtor’s written financial statement; reliance is unreasonable when the creditor ignores information showing the statement is false or incomplete.

First National Bank of the Black Hills v. Houk (In Re Houk) · filed 1982-01-15(a)(2)(B)(iii)

In this case, Creditor’s reliance was not reasonable because Creditor ignored available information which disclosed Debtor’s financial statement was false or incomplete. This Court cannot find Creditor’s reliance reasonable when it knew Debtor had other liens and judgments and failed to investigate or verify Debtor’s credit prior to renewal of credit.

Section 523(a)(2) excepts debts from discharge when a debtor obtains or renews credit through fraud or a materially false written financial statement on which the creditor reasonably relied.

United Security Bank v. Stewart (In Re Stewart) · filed 1982-02-03(a)(2)(A) and (a)(2)(B)

There was an intent to deceive. Relying upon the statements and the guaranties of Stewart’s wife and children, the Bank renewed both Mall Auto’s and Stewart’s loans. The reliance was reasonable, especially in view of Stewart’s averred overall net worth of over $600,-000.00. ... Stewart’s debts owing to the United Security Bank are nondischargeable. 11 U.S.C. § 523(a)(2)(A), (B).

Section 523(a)(2)(B) requires reasonable creditor reliance to except a debt from discharge.

Lincoln National Bank v. Conti (In Re Conti) · filed 1982-03-25(a)(2)(B)

There is no evidence that Plaintiff relied on the failure to return or that any such reliance was reasonable or justifiable under the circumstances.

Section 523(a)(2)(B) requires a misrepresentation about the debtor’s or an insider’s financial condition to be in writing for the resulting debt to be excepted from discharge.

Jahanger v. Bedard (In Re Bedard) · filed 1982-04-21(a)(2)(B)

As previously mentioned, misrepresentation of financial condition is covered by § 523(a)(2)(B). Furthermore, such a misrepresentation of financial condition must be in writing if the underlying claim is to be excepted from discharge.

Section 523(a)(2)(B) requires a creditor’s reliance on a materially false written financial statement to be reasonable.

Household Finance Corp. v. Cohen (In re Colletti) · filed 1982-06-29(a)(2)(B)

The only real question before the Court is whether the Plaintiff’s reliance was reasonable. On the facts in this case I conclude that it was, and that HFC could not have discovered the omitted debts through reasonable, independent inquiry.

Section 523(a)(2)(B)(iii) requires the creditor to have relied on the debtor’s financial statement to except the debt from discharge.

Teachers Service Organization, Inc. v. Walker (In re Walker) · filed 1982-05-27(a)(2)(B)(iii)

The court believes that the defendants’ testimony regarding the issuance of the loan is credible, and therefore finds that there was no reliance by plaintiff on' the incomplete statement of debts which is shown on the credit application which is part of Plaintiff’s Composite Exhibit No. 3. The requirements of 11 U.S.C. § 523(a)(2)(B)(iii) have not been satisfied. Therefore, the relief requested in the complaint will be denied.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a false written financial statement to prove reasonable reliance and the debtor’s intent to deceive.

Bucks County Teachers' Federal Credit Union v. McVan (In Re McVan) · filed 1982-07-14(a)(2)(B)

The issue presented herein is whether the debt owed by the debtors to a credit union is nondischargeable pursuant to § 523(a)(2)(B) of the Bankruptcy Code (“the Code”) as a debt for obtaining money by the use of a materially false statement in writing about the debtors’ financial condition on which the credit union reasonably relied and which the debtors made with the intent to deceive. We conclude that the debt in question is dischargeable because the credit union failed to sustain its burden of proving that it relied on the debtors’ credit application or that the debtors had the requisite intent to deceive when they prepared the application.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor causes a materially false written financial statement to be made or published with intent to deceive and the creditor reasonably relies on it to its detriment.

Wickman MacHine Tools, Inc. v. Bradford (In Re Bradford) · filed 1982-09-07(a)(2)(B)

The false financial statement must be made or published with intent to deceive, the statement must be materially (not incidentally) false and the creditor must to its detriment reasonably rely thereon.

Section 523(a)(2)(B) judges a financial statement’s material falsity by the overall picture it gives of the debtor’s financial condition.

First Safety Fund National Bank v. Valley (In Re Valley) · filed 1982-07-16(a)(2)(B)

It is the debtor’s actual financial condition and the picture he paints of it that is at issue, and the materiality question should be judged in that light, and not on the basis of the seriousness or size of his individual error.

Section 523(a)(2)(B) requires intent to deceive for a debt obtained through a false written statement about the debtor’s financial condition to be nondischargeable.

Wybro Federal Credit Union v. Mann (In Re Mann) · filed 1982-08-03(a)(2)(B)

In the instant case, we find that the debtor lacked the requisite intent to deceive when she applied for the loan in question. Consequently, we conclude that the debt owed to the credit union does not fall within the purview of § 523(a)(2)(B) and is, thus, dis-chargeable.

Section 523(a)(2)(B)'s intent-to-deceive requirement makes a debtor's knowledge of a partner's financial statement material to whether the resulting debt is dischargeable.

Modern Distributors, Inc. v. Gray (In Re Gray) · filed 1982-08-23(a)(2)(B)

In particular, the addition of the intent to deceive language of 11 U.S.C. § 523(a)(2)(B) imposes a greater burden on the creditor objecting to dis-chargeability than existed in the earlier cases. ... The contested facts related to the debtor’s knowledge and intent, the statement’s falsity, and Modern Distributors reliance are therefore material. Because of the existence of genuine issues of material fact, summary judgment on the issue of dis-chargeability must be denied.

Section 523(a)(2)(B) requires the creditor to prove reasonable reliance on a materially false written financial statement and the debtor’s intent to deceive.

Miles Employee Federal Credit Union v. Griffin (In Re Griffin) · filed 1982-08-24(a)(2)(B)

Although it is conceded that the credit information at issue was supplied by Debtors in writing, “respects Debtors’ financial condition,” and is “materially false,” 11 U.S.C. § 523(a)(2)(B)(i) and (ii), it is the opinion of the Court that Plaintiff has not established the elements of “reasonable reliance” or “intent to deceive” as required by 11 U.S.C. § 523(a)(2)(B)(iii) and (iv), and has thereby failed to establish a prima facie case for a finding of nondis-chargeability.

A debt arising from a false written financial statement remains nondischargeable when the creditor learns of the deceit but renews the loan to mitigate its loss.

Central National Bank & Trust Co. of Enid v. Liming (In Re Liming) · filed 1982-09-02(a)(2)(B)

Initially, the debtor submitted a clearly false financial statement which was relied upon by the bank to its detriment and gave rise to this debt. At the time of the renewal and debt reduction the lender while advised of the original deceit, had no choice but to renew and mitigate its loss the best way possible. Under such circumstances the renewed unpaid amount remains nondischargeable.

Section 523(a)(2)(B) requires a creditor to reasonably rely on a debtor's written financial statement for the resulting debt to be excepted from discharge.

State Bank of Parsons v. Pappas (In Re Pappas) · filed 1982-10-15(a)(2)(B)(iii)

The Court concludes that the financial statement was of no consequence in the Bank’s decision to renew the loans. Therefore, the Court finds that the Bank did not reasonably rely on the financial statement as required by 11 U.S.C. § 523(a)(2)(B)(iii). Accordingly, Pappas’ debts of $47,856.25 and $22,566.67 are dischargeable.

Section 523(a)(2)(B) requires a creditor to prove reliance on a written financial statement to except the resulting debt from discharge.

Citizens Bank & Trust Co. v. Whitehouse (In Re Whitehouse) · filed 1982-10-21(a)(2)(B)

While it is uncontroverted that an extension of credit was made to the defendants on August 28, 1981, by by plaintiff, there is no testimony or other proof to support a finding that the bank placed any reliance upon the financial statement in making such extension. ... It is the opinion of the Court, after a thorough review of the pleadings and after having given due weight and consideration to the evidence and credibility of the witnesses at trial, that the plaintiff has failed to sustain its burden of proof, and that the debt is dischargeable under the provisions of 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor’s reliance on a financial statement to be reasonable in light of its own practices, industry standards, and the surrounding circumstances.

Telco Leasing, Inc. v. Patch (In Re Patch) · filed 1982-11-04(a)(2)(B)

It appears appropriate, therefore, that the reasonableness of a creditor’s reliance on a financial statement should be judged by comparing the creditor’s actual conduct with (1) the creditor’s own normal business practices, and (2) the standards and customs of the industry, (3) in light of the surrounding circumstances existing at the time the application was made and credit extended.

Section 523(a)(2)(B) can make a renewed loan nondischargeable when the creditor relies on a false financial statement, even if it advances no new cash.

Lincoln First Bank, N.A. v. Tomei (In Re Tomei) · filed 1982-10-19(a)(2)(B)

This language clearly contemplates that a false representation in connection with a renewal or extension of credit, even in the absence of the advancement of additional cash, may render the underlying debt nondischargeable.

Section 523(a)(2)(B)(iii) requires a creditor seeking to except a debt from discharge based on a written financial statement to prove reliance on that statement.

W.E. Davis Co. v. Medow (In Re Medow) · filed 1982-12-10(a)(2)(B)(iii)

All of the elements of § 523(a)(2)(B) have been satisfied except for subsection (iii). The court concludes that the plaintiff has failed to meet its burden of proof required under Code § 523(a)(2)(B)(iii) regarding the issue of reasonable reliance.

Section 523(a)(2)(B) leaves a debt dischargeable if the creditor fails to prove any element of the written financial statement exception.

In Re Randall Wayne Bush and Karen Anne Bush, A/K/A Karen Anne Peterson, Debtors Valley National Bank v. Randall Wayne B · filed 1983-01-06(a)(2)(B)

If an objecting creditor fails to prove every element contained in § 523(a)(2)(B) of the Bankruptcy Code of 1978, the debt in question is dischargeable.

Section 523(a)(2)(B) requires a materially false written statement about financial condition, reasonable creditor reliance, and the debtor’s intent to deceive before a resulting debt is excepted from discharge.

Clearwater Oaks Bank v. Forcella (In Re Forcella) · filed 1983-02-03(a)(2)(B)

This Court is, therefore, of the opinion that the Bank did not rely on the Debtor’s false financial statement. Because reliance and intent to deceive are clearly required by § 523(a)(2)(B), Plaintiff has failed to demonstrate that the debt owed to it falls within the statutory exception to discharge.

Section 523(a)(2)(B) requires reasonable reliance on a written statement; reliance on an old, limited customer application may be unreasonable when trading conditions have changed.

Heinold Commodities, Inc. v. Paulk (In Re Paulk) · filed 1982-12-22(a)(2)(B)

To rely on the statements made ten months earlier under changed conditions of increased volume of trading, if Heinold in fact did rely on these statements, was not a reasonable reliance.

Section 523(a)(2)(B) does not treat a check as a written statement about the debtor’s financial condition.

A.G. Edwards & Sons, Inc. v. Paulk (In Re Paulk) · filed 1982-12-22(a)(2)(B)

Therefore, it is clear that a check, being a “negotiable instrument,” a form of contract, creating rights, and not a statement, supplying information, cannot be a “false financial statement” within the meaning of 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B)(iii) requires reasonable reliance on a debtor’s written financial statement; reliance on an income figure marked as an estimate was unreasonable.

Flagship National Bank of Broward County v. Posick (In Re Posick) · filed 1983-01-14(a)(2)(B)(iii)

The Court finds in regard to Section 523(a)(2)(B)(i), (ii) and (iii), that the written documents submitted by the debtor with reference to his financial condition were materially false as statements of present income but finds that reliance on the $40,000 figure when qualified by the notation “est.”, indicating that it was an estimate, was not reasonable reliance by the bank.

Section 523(a)(2)(B) requires a creditor seeking to except a renewed loan from discharge to prove reasonable reliance on the debtor’s false written financial statement when renewing the loan.

First Bank of Pinellas County v. Nacol (In re Nacol) · filed 1983-02-03(a)(2)(B)

The Bank never requested an updated financial statement, but repeatedly and routinely renewed the note as a matter of course. Accordingly, this Court is satisfied that the Plaintiff failed to establish that it reasonably relied on a false financial statement when executing the note dated June 4, 1981, and, absent the essential element of reasonable reliance, the evidence presented does not justify granting an exception to discharge.

Section 523(a)(2)(B)(iii) requires the creditor to prove actual and reasonable reliance on a materially false written financial statement.

In Re Orrin C. Kreps, Jr. And Margaret W. Kreps, Debtors. First National Bank of Lansing v. Orrin C. Kreps, Jr. And Marg · filed 1983-02-17(a)(2)(B)(iii)

The burden of proving each element, including reasonable reliance, lies on the creditor. ... First National satisfied its burden of proving actual reliance. ... No evidence in the record indicates that the bank’s reliance upon the letter was unreasonable.

Section 523(a)(2)(B)(iii) requires a creditor to prove reasonable reliance on a financial statement. The bank failed to do so when it accepted an outdated statement from a third party without checking with the debtor.

Century First National Bank of Pinellas County v. Holwerda (In Re Holwerda) · filed 1983-03-14(a)(2)(B)(iii)

In the case under consideration, the Plaintiff did not meet its burden of demonstrating that it reasonably relied on the Defendant’s false financial statement. ... Under such circumstances, the Plaintiff cannot be said to have relied on Defendant’s financial statement, and, if it did in fact rely on the statement, such reliance was not reasonable.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtained credit through a materially false written financial statement that the creditor reasonably relied on and the debtor intended to deceive.

First Security Bank of Fox Valley v. Ardelean (In Re Ardelean) · filed 1983-03-15(a)(2)(B)

In conclusion, the creditor has shown reasonable reliance on the debtor’s false financial statement as required by 523(a)(2)(B)(iii). ... The court finds that all of the elements of 523(a)(2)(B) have been proven and the debt at issue is non-dischargeable.

Section 523(a)(2) does not prevent discharge based on oral statements about the debtor's or an insider's financial condition.

In Re Blackwell · filed 1983-03-22(a)(2)

All of the statements made by Blackwell to the plaintiffs were essentially statements concerning the financial condition of Studio-1. Further, all of Blackwell's statements were oral. The representations are therefore outside the scope of 11 U.S.C. Sec. 523(a)(2) and can not be the basis for preventing discharge of the bankrupt.

Section 523(a)(2)(B) does not except a debt from discharge based on a partner’s deceptive intent when the debtor did not know the financial statement was false and did not participate in the deception.

Alden State Bank v. Anderson (In Re Anderson) · filed 1983-04-11(a)(2)(B)

The Bank has not proven that Anderson intentionally deceived the Bank by submitting false financial statements, and any intent to deceive on the part of Christeson will not be imputed to Anderson to except the Bank’s claim from the discharge granted to Anderson.

Section 523(a)(2)(A) requires a creditor seeking to except a debt for services from discharge to prove a knowingly or recklessly false representation and intent to deceive by clear and convincing evidence.

Zeunert v. Brink (In Re Brink) · filed 1983-05-24(a)(2)(A)

The evidence submitted by Zeunert must prove all elements required for non-dischargeability under 11 U.S.C. § 523(a)(2)(A) as set out in this court’s previous decision denying summary judgment for the plaintiff in this case. ... The evidence submitted by Zeunert at trial does not prove, by clear and convincing evidence, (i) that Brink obtained services by means of false representations which he knew were false or which were made with reckless disregard of their truthfulness; or (ii) that Brink had an intent to deceive Zeunert.

Section 523(a)(2)(B) treats reckless disregard for the truth of a written financial statement as equivalent to intent to defraud.

Town North National Bank of Longview v. Biedenharn (In Re Biedenharn) · filed 1983-06-02(a)(2)(B)

At the very least, Biedenharn acted with such reckless disregard as to be the equivalent of intent to defraud.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a written statement about financial condition to except the debt from discharge.

Tappan Co. v. Klusman (In Re Klusman) · filed 1983-04-28(a)(2)(B)

2. Defendants’ debt to the plaintiff is not nondischargeable under 11 U.S.C. § 523(a)(2). ... c. Plaintiff has failed to establish by clear and convincing evidence that it reasonably relied on such representations.

Section 523(a)(2)(B) requires a creditor to rely reasonably on a debtor’s written statement about financial condition; suspicious circumstances can require the creditor to investigate further.

Lowell Holding Corp. v. Granovetter (In Re Granovetter) · filed 1983-04-29(a)(2)(B)

Rather, I hold that in a case filled with as many suspicious circumstances as this one, a creditor cannot deviate from its own established procedure and then convince this court that its behavior was “reasonable.”

Section 523(a)(2)(B) allows an assignee that reasonably relies on a materially false financial statement to seek an exception to discharge when the debtor knew an assignment was possible.

Long Island Trust Co. v. Rodriguez (In Re Rodriguez) · filed 1983-05-12(a)(2)(B)

If Dr. Rodriguez was unaware of the possibility of an assignment our conclusion might be different, but the simple fact that he was aware removes this situation from the general considerations regarding the rights of assignees and preserves for LIT a right that its assignor, Macrolease, might have forfeited because of its seeming complicity in the preparation of the statement. ... Accordingly, LIT’s role as assignee of Macrolease’s interest does not impair its power to object to the discharge of the subject debt.

Section 523(a)(2)(B)(iii) requires reasonable reliance on a written financial statement; signing a guaranty to protect one’s own business interests does not establish that reliance.

Madden v. Van Der Laan · filed 1983-07-19(a)(2)(B)(iii)

Rather, it is evident from the record, and wholly consistent with the Bankruptcy Court’s factual determinations, that Madden executed the personal guaranties ultimately “to protect his business interests,” rather than in reliance on Van Der Laan’s personal financial statements. In the absence of the requisite reliance, Madden’s claim must fail. 11 U.S.C. § 523(a)(2)(B)(iii).

A creditor charged with knowledge that a financial statement is false cannot reasonably rely on selected parts of it to establish that a debt is nondischargeable.

Beneficial Finance Co. v. Jackson (In Re Jackson) · filed 1983-08-16(a)(2)(B)

A creditor may not claim to rely on a portion of a financial statement when extending a loan to an applicant when it is charged with knowledge of the falsity of the statement.

Section 523(a)(2)(B) requires a creditor to prove intentional deception and reasonable reliance on a written financial statement to except a debt from discharge.

Barnett Bank of South Florida, N.A. v. Gilman (In Re Gilman) · filed 1983-07-29(a)(2)(B)

It is well settled that a creditor seeking to except its claim from a Chapter 7 discharge through Section 523(a)(2)(B) must prove each of the elements specified therein. ... BARNETT has failed to establish by clear and convincing evidence that its disbursement of loan proceeds of this magnitude to the Debtor within one (1) hour after entering the bank premises for the purpose of procuring said loan was made with reliance upon those representations and that such reliance was reasonable.

Section 523(a)(2)(A) requires proof of intentional misrepresentation and creditor reliance to except a debt from discharge.

Citizens Bank & Trust Co. v. Knott (In Re Knott) · filed 1983-08-09(a)(2)(A)

A debt created by the extension of credit based upon the submission of a financial statement may be rendered nondis-chargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(2)(A) provided that the objecting creditor can show the existence of each of the following elements. ... Because this Court can find neither that Knott intentionally executed a false financial statement or that Citizens relied on that financial statement when it extended Knott three loans in 1980, this Court must deny that portion of Citizens’ complaint which relates to the dischargeability of these debts.

Section 523(a)(2) requires a creditor seeking to except a debt from discharge based on a false written financial statement to prove reasonable reliance and the debtor’s intent to deceive.

W.C.T.A. Federal Credit Union v. Volpe (In Re Volpe) · filed 1983-08-16(a)(2)

A discharge may be excepted for obtaining money or an extension, renewal or refinance of credit by use of a (1) statement in writing; (2) that is materially false; (3) respecting the debtor’s financial condition; (4) on which the creditor reasonably relied; (5) that the debtor made with intent to deceive. 11 U.S.C. § 523(a)(2). All of these elements must be shown before a debt is excepted from discharge.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive the creditor and that the creditor reasonably relied on the financial statement.

Caribank, N.A. v. Diaz De Villegas (In Re Diaz De Villegas) · filed 1983-09-07(a)(2)(B)

The Court concludes that there is insufficient evidence that the Debtors intended to deceive the Bank by the omission of the contingent liabilities on the financial statements, or evidence from which an inference of intent could be drawn. ... In addition, the Court concludes that it was not reasonable for the Bank to rely on the absence of these guaranties from the financial statements and therefore the third element has not been satisfied either.

Section 523(a)(2)(B) requires a creditor to prove the elements of a claim based on a false written financial statement to except a debt from discharge.

Martha's Vineyard Cooperative Bank v. Andrews (In Re Andrews) · filed 1983-10-28(a)(2)(B)

The Plaintiff having failed to meet its burden of proof on the elements of Section 523(a)(2)(B) of the Bankruptcy Code, it is therefore ordered that the debt of the debtors to the Plaintiff as evidenced by loans dated October 16,1980 and October 28,1980 are discharged and judgment shall enter for the Defendants in this adversary proceeding.

Section 523(a)(2)(B)(iii) requires a creditor to prove actual, reasonable reliance on a false financial statement and injury from that reliance.

Bank of Commerce v. Ebbin (In Re Ebbin) · filed 1983-09-14(a)(2)(B)(iii)

The crucial element in this case becomes subsection (B)(iii). The Bank of Commerce must show that it in fact relied on the August 3 statement, that its reliance was reasonable and that it was injured as a result of that reliance.

Section 523(a)(2)(B) permits a finding of reliance on a false financial statement for a renewed loan when the lender bases the renewal on that statement rather than other factors.

Merchants National Bank v. Denenberg (In Re Denenberg) · filed 1983-09-28(a)(2)(B)

Where the renewal is granted with reference only to the financial statement and is not based on other factors, a finding of reliance is warranted.

Section 523(a)(2)(B) makes a debt nondischargeable when the debtor obtains credit through a materially false written financial statement on which the creditor reasonably relied and which the debtor made with intent to deceive.

Citizens National Bank v. Vandergrift (In Re Vandergrift) · filed 1983-11-28(a)(2)(B)

The creditor established that it actually relied upon the materially false statement. ... The court will enter an order in accordance with this opinion declaring the claim of The Citizens National Bank nondischargeable.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s financial statement; reliance is unreasonable when the creditor knows the statement is incomplete and inaccurate.

Village Bank & Trust Co. of Ridgefield v. Futterman (In Re Futterman) · filed 1983-12-09(a)(2)(B)

It is therefore apparent that a creditor must not only prove reliance upon a debtor’s financial statement but also that such reliance was reasonable. ... Under those circumstances, it was unreasonable for the Bank to rely upon that financial disclosure — if it did.

Section 523(a)(2)(B) requires reasonable reliance on a debtor’s financial statement; reliance is unreasonable when a creditor knows or should know the statement is inaccurate and fails to verify it.

Kentucky Bank & Trust Co. v. Duncan (In Re Duncan) · filed 1983-12-21(a)(2)(B)

From the proof in the case it is clear that Kentucky Bank unreasonably relied on the financial statement in that it had constructive, if not actual, knowledge that the financial information was not accurate, and it ignored its commercial duty to verify that information.

A financial statement may be materially false even if it is literally true, when it materially misrepresents the debtor’s financial condition through an omission.

First National Bank of Elgin v. Nilles · filed 1983-12-12(a)(2)(B)(i)

As we stated, a financial statement can be literally true within the four corners of the document but still be materially false if it is a material misrepresentation of the debtor’s financial condition.

Section 523(a)(2)(B) requires reasonable reliance on a debtor’s written financial statement; actual reliance alone is insufficient.

Thorp Credit Inc. of Ohio v. Saunders (In Re Saunders) · filed 1984-02-13(a)(2)(B)

While it would appear that under either analysis the debt should be held nondis-chargeable, the element of reliance is not necessarily satisfied merely upon a showing of actual reliance. It must also be determined whether or not the reliance was reasonable.

Section 523(a)(2)(B) excepts a debt from discharge when a debtor’s failure to update a written statement of financial condition makes it materially false, the debtor intends to deceive, and the creditor reasonably relies on the statement.

Missouri Division of Family Services v. Jones (In Re Jones) · filed 1984-03-07(a)(2)(B)

For these reasons, the Court concludes that the $497.00 owed Plaintiff is non-dis-chargeable under 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires detrimental reliance on a false financial statement before a renewed debt can be excepted from discharge.

In Re Gadberry · filed 1984-02-03(a)(2)(B)

Whether or not Congress wanted to maintain some last “punitive” vestige in Section 523(a)(2)(B), there still must be a detriment.

Section 523(a)(2)(B) requires reasonable creditor reliance on a debtor’s written financial statement, and a genuine factual dispute about that reliance prevents summary judgment on dischargeability.

First National Bank in Albuquerque v. Zambrano (In re Zambrano) · filed 1984-03-16(a)(2)(B)

Given the reliance requirements of subsection (B), the Court finds that a genuine issue of material fact exists as to FNBIA’s reliance on Zambrano’s financial statement.

Section 523(a)(2)(B)(iii) requires reasonable reliance on a debtor’s financial statement; a creditor’s reliance is unreasonable when its credit report reveals an omitted debt and it fails to investigate.

W.A.F.B. Federal Credit Union v. Furimsky (In Re Furimsky) · filed 1984-05-09(a)(2)(B)(iii)

The credit union had information before it indicating debtor’s financial statement was inaccurate. It did nothing with that information. This is hardly reasonable reliance.

Section 523(a)(2)(B) requires creditor reliance on a written financial statement to except a debt from discharge; a statement submitted after the loan cannot establish that reliance.

St. Charles Savings & Loan Ass'n v. Besch (In Re Besch) · filed 1984-05-14(a)(2)(B)

Therefore, it is impossible that St. Charles relied upon that financial statement in making the $72,-000 loan. With regard to the loan of July 29, 1978 this court grants summary judgment in favor of the Beschs.

Section 523(a)(2)(B) requires a creditor to prove that a renewal of credit was obtained through a materially false written financial statement that the debtor caused to be made or published with intent to deceive and on which the creditor reasonably relied.

Birmingham Trust National Bank v. Roy (In Re Roy) · filed 1984-06-04(a)(2)(B)

Under § 523(a)(2)(B), it is plaintiff’s burden to prove that the debtor obtained a renewal of credit by use of a written statement respecting the debtor’s financial condition: (1) that was “materially false”, (2) which the debtor “caused to be made or published with intent to deceive”, .and (3) upon which the creditor “reasonably relied.”

Section 523(a)(2)(B) does not require a creditor to investigate an applicant’s financial condition independently when the written figures give no reason to suspect dishonesty or falsity.

Lincoln First Bank, N.A. v. Vairo (In Re Vairo) · filed 1984-06-08(a)(2)(B)

In accordance with Lincoln’s normal business practice it was not required to undertake an independent inquiry into the financial condition of an applicant for options trading when the figures furnished by the applicant did not disclose any facts that would cause Lincoln to believe that the applicant was dishonest or that the information was false.

Section 523(a)(2) makes a debt obtained through knowingly false financial representations nondischargeable when the creditor reasonably relies on them.

Dean Whitter Reynolds, Inc. v. Davenport (In re Davenport) · filed 1984-06-14(a)(2)

The representations concerning the assets, liabilities, net worth, and annual sales were knowingly and fraudulently made and were reasonably relied upon by Dean Whitter in extending credit through the commodity margin account. The proof is clear and convincing that the Defendant Davenport violated the provisions of 11 U.S.C. § 523(a)(2), and as such his indebtedness to Dean Whitter is non-dischargeable.

Section 523(a)(2)(B) requires an important and substantial untruth for a financial statement to be materially false, considering the statement alongside information submitted with it.

First National Bank of Boston v. Mann (In Re Mann) · filed 1984-07-13(a)(2)(B)

For the purposes of Section 523(a)(2)(B) a “materially false” financial statement is one containing an important and substantial untruth. ... Based upon the testimony and Exhibits, I am unable to find that the reports, when read together with the other information submitted simultaneously to the Bank, were materially false.

Section 523(a)(2)(B)(iv)’s intent to deceive requirement can be satisfied by a debtor’s reckless disregard for the truth of written financial statements.

CSM Federal Credit Union v. Lange (In Re Lange) · filed 1984-07-19(a)(2)(B)(iv)

Nevertheless, after consulting the legislative history of § 523(a)(2), we conclude that where a debt is obtained by the creditor’s reasonable reliance on false written statements of the debtor’s financial condition, a reckless disregard for the truth of those statements is an adequate basis for the intent to deceive necessary to a finding of non-dischargeability.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s written statement about financial condition to except a debt from discharge.

First Hawaiian Bank v. Klein (In re Klein) · filed 1984-07-24(a)(2)(B)

The Court finds Plaintiff’s reliance on the applications for the homeowner’s loan and the Yes Check Account not to be reasonable. Plaintiff has not met the third requirement of Section 523(a)(2)(B), and thus said debt to Plaintiff is dischargeable.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge to prove reasonable reliance on the debtor’s written financial statement.

Marion National Bank v. Peterson (In Re Peterson) · filed 1984-08-10(a)(2)(B)

Applying these factors denoting unreasonable reliance by a creditor on a false financing statement, the Court must conclude in the case at bar that Marion National Bank’s alleged reliance when the loan transaction was consummated on debtor’s sole ownership of the 19 items of collateral listed by debtor was unreasonable.

A creditor seeking to except a debt from discharge must prove reasonable reliance on the debtor’s written financial statement; an unexplained failure to check the debtor’s credit can defeat that showing.

Lanco Federal Credit Union v. Weiss (In Re Weiss) · filed 1984-09-19(a)(2)(B)(iii)

However, we need not decide this question because we find that the plaintiff has failed to prove by clear and convincing evidence that it reasonably relied on the loan application in making the loan. We so find because the plaintiff, without satisfactory explanation, failed to run any type of credit cheek on the debtor in order to determine if she might have intentionally or inadvertently omitted any debts from her loan application.

Section 523(a)(2)(B) does not require a creditor to rely solely on a materially false written financial statement to establish that a debt is nondischargeable.

Standard Chartered Bank, PLC v. Klepach (In Re Bonanza Import & Export, Inc.) · filed 1984-10-03(a)(2)(B)

It is well established that Standard’s partial reliance is sufficient to preclude a discharge under 11 U.S.C. Section 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a materially false financial statement; calculating the debtor’s net worth alone does not establish reliance.

Chase Bank International v. Klepach (In Re Bonanza Import & Export, Inc.) · filed 1984-10-03(a)(2)(B)

While Ms. Veski performed a mathematical calculation regarding defendants net worth and the proposed credit facility, this calculation is not the type of analysis or reliance contemplated by Section 523(a)(2)(B). Since Chase failed to establish the element of reliance by clear and convincing evidence, the Court cannot preclude a discharge of the defendants’ debt to Chase.

Section 523(a)(2)(B) measures whether a creditor reasonably relied on a financial statement by considering the creditor’s conduct, its normal business practices, industry practices, and the circumstances when the loan was sought.

North Park Credit v. Harmer (In Re Harmer) · filed 1984-10-24(a)(2)(B)

In the opinion of this court, the reasonableness of a creditor’s reliance on a financial statement should be judged by comparing the creditor’s actual conduct in light of its own normal business practices and that of its industry in light of the surrounding circumstances existing at the time the application for loan was made.

Section 523(a)(2)(B) requires a debtor’s statement that collateral is free of other liens to be in writing for the misrepresentation to bar discharge.

In Re Engler · filed 1984-10-01(a)(2)(B)

A debtor's assertion that he owns certain property free and clear of other liens is a statement respecting his financial condition. ... Consequently, the statement must be in writing to bar the debtor's discharge.

Section 523(a)(2)(B) requires a creditor to prove every element of a fraudulent financial statement claim, including reasonable reliance, before the debt can be held nondischargeable.

Adrian State Bank v. Keane (In re Keane) · filed 1984-10-15(a)(2)(B)

This evidence fails to demonstrate that all the elements of 11 U.S.C. § 523(a)(2) have been fulfilled. Although the Plaintiff may be able to present additional evidence at some later point in this proceeding, the immediate absence of sufficient evidence to support the requirements of this section requires this Court to conclude that the Plaintiff is not entitled to summary judgment.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a written financial statement to prove material falsity, reasonable reliance, and intent to deceive.

First Tennessee Bank v. Rowe (In Re Rowe) · filed 1984-12-21(a)(2)(B)

Inasmuch as the Plaintiff has failed to prove three of the four elements necessary to sustain a claim of non-dischargeability pursuant to 11 U.S.C. § 523(a)(2)(B), this Court is satisfied that Judgment should be entered in favor of the Defendant/Debtor with regard to the claims of non-dischargeability.

Section 523(a)(2)(B) treats a warranty deed stating that property is “free and unencumbered” as a written statement about the debtor’s financial condition, but the creditor must prove intent to deceive.

King v. Prestridge (In Re Prestridge) · filed 1985-01-11(a)(2)(B)

Based on the foregoing and under a totality of the particular facts and circumstances of this proceeding, the court finds that the subject warranty deed containing the phrase “free and unencumbered” falls within the contemplation of 11 U.S.C. § 523(a)(2)(B)—i.e. a statement in writing respecting the Debtors’ financial condition. ... Based on a totality of the particular facts and circumstances, the court concludes that Mr. King has failed to establish that the Debtors had any intention of deceiving him when they made or published the warranty deed.

Section 523(a)(2)(B) treats a financial statement that grossly overvalues assets and omits substantial liabilities as materially false.

Management Jets International, Inc. v. Mutschler (In Re Mutschler) · filed 1984-11-07(a)(2)(B)

In this case, the financial statement both grossly overvalued assets and omitted a great deal of liabilities. The Court must find that the financial statement was a materially false statement.

Section 523(a)(2)(B) does not make a debt nondischargeable based on a financial statement the creditor saw only after deciding to enter the business venture.

Paro v. Tetzlaff (In re Tetzlaff) · filed 1984-11-09(a)(2)(B)

Thus, notwithstanding Tetzlaff’s denial that he and Paro exchanged financial statements, the inescapable conclusion that must be drawn from the testimony in this case is that (1) Paro decided to go into business with Tetzlaff in late 1978, prior to ever seeing Tetzlaff’s financial statement; and (2) Tetzlaff never represented to Paro that he would use his interest in any particular property to finance their business. Hence, Count I must fail for lack of proof.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a written financial statement to prove actual and reasonable reliance.

Bank One of Wapakoneta, NA v. Huffman (In Re Huffman) · filed 1984-12-21(a)(2)(B)

In addition to finding that the bank did not actually rely on the April 1981 financial statement, the court further finds that it would have been unreasonable to rely on it.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a false financial statement to prove reasonable reliance; ignoring available information that casts doubt on the statement defeats that showing.

IFG Leasing Co v. Vavra (In Re Harms) · filed 1985-03-06(a)(2)(B)

Having ignored available information that should have led it to protect itself by making further inquiry, IFG cannot be heard now to say that it reasonably relied upon Debtor’s financial statement.

Section 523(a)(2) does not except a debt from discharge based on an oral statement respecting the debtor’s financial condition.

United Virginia Bank v. Cook (In Re Cook) · filed 1985-02-04(a)(2)

The conclusion of the Fourth Circuit and supported by a clear reading of § 523(a)(2) is that false representations or false pretenses which are transmitted orally respecting the debtor’s financial condition are not actionable under § 523(a)(2).

Section 523(a)(2)(B) requires a creditor seeking to except a debt based on a written financial statement to prove reasonable reliance and the debtor’s intent to deceive.

Bank of Miami v. Espino (In Re Espino) · filed 1985-04-15(a)(2)(B)

The Court finds that the Bank failed to meet its burden of proof under 11 U.S.C. § 523(a)(2)(B) by clear and convincing evidence that it either reasonably relied upon the Debtor’s financial statements when it advanced funds to Hemisphere or that the Debtors provided said financial statements to the Bank with “the intent to deceive”.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge to prove each element of its false financial statement claim, including material falsity and actual reliance.

Lambrakis v. Jones (In Re Jones) · filed 1985-04-30(a)(2)(B)

In conclusion, the Court notes that the failure to establish any one of the five elements of the test for nondischarge-ability of a debt must result in denial of Plaintiff’s objection. Since in this case, Plaintiff failed to establish that the existing discrepancies were material, that there was actual reliance, or that the income information was substantially untrue at the time the statements were made, discharge of the debt will be allowed.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a false financial statement to prove reasonable reliance on that statement.

Huntington National Bank v. Sahadi (In Re Sahadi) · filed 1985-06-12(a)(2)(B)

Despite the fact that the Plaintiff has apparently demonstrated the existence of all other elements of 11 U.S.C. § 523(a)(2)(B), it has failed to show that its reliance on the financial statement was reasonable. Having failed in this respect, the Plaintiff is not entitled to judgment on its Complaint. Therefore, it must be held that the debt is dischargeable.

Section 523(a)(2)(B) requires reasonable reliance on a false financial statement; a creditor that cannot establish it conclusively cannot obtain summary judgment.

Thomas W. Lowey Leasing v. Kelly (In re Kelly) · filed 1985-06-13(a)(2)(B)

We find no need to address all of the evidence of the plaintiff on the other elements of § 523(a)(2)(B) because we hold that plaintiff has not shown conclusively that its reliance on the defendant’s financial statement was reasonable and this alone is fatal to its motion.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge to prove actual reliance on the debtor’s written financial statement.

Whitney National Bank v. Delano (In Re Delano) · filed 1985-06-26(a)(2)(B)

In the present case the Bank has failed to show it in fact relied on the financial statement. Instead, I find that the financial statement was merely a formality for the Bank’s file.

Section 523(a)(2)(B) does not require a creditor to rely solely on a debtor’s false financial statement; reasonable partial reliance can suffice.

Sparkman v. Janes (In Re Janes) · filed 1985-08-14(a)(2)(B)

The Court finds that plaintiffs’ partial reliance on the financial statement was reasonable under the circumstances and was sufficient to satisfy the third element of the § 523(a)(2)(B) test.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s written financial statement to except a debt from discharge.

Bank of Louisville v. Perez (In Re Perez) · filed 1985-09-09(a)(2)(B)

Applying these factors denoting unreasonable reliance by a creditor on a false financial statement, the Court must conclude in the case at bar that Bank of Louisville’s alleged reliance on debtor’s financial statement dated April 21, 1982 was unreasonable.

Section 523(a)(2)(B) requires the creditor to prove reasonable reliance on the written financial statement and the debtor’s intent to deceive.

2 Creditway of America, Inc. v. Hempfner (In Re Hempfner) · filed 1985-09-16(a)(2)(B)

The provisions in § 523(a)(2)(B), sub-paragraphs (iii) and (iv), however, are not satisfied. Under sub-paragraph (iii), the creditor must have reasonably relied on the false statement in extending credit. ... When this idea is coupled with the principle that the exceptions set forth in § 523(a) are to be construed liberally in favor of the debtor and strictly against creditor, this Court finds that Creditway has not sustained its burden of proof to show an intent to deceive.

Section 523(a)(2)(B) does not except a debt from discharge based on a credit application that contains no information about an insider’s financial condition.

Meat Requirements Coordination, Inc. v. Salett (In Re Salett) · filed 1985-10-18(a)(2)(B)

The creditor has not sustained its burden under this exception to discharge because the application for credit cannot be considered a statement concerning the financial condition of the insider, Bay International Corp. The application does not request any financial information about the company.

Section 523(a)(2)(B) requires proof that a written financial statement was materially false; whether the lender would have made the loan knowing the debtor’s true finances is a guide to materiality.

In the Matter of Robert Oneal Bogstad, Debtor-Appellant · filed 1985-12-13(a)(2)(B)

Since PCA testified that it would have made the loan even had the Bogstads been worth less than what PCA was able to prove that the Bogstads were in fact worth, the bankruptcy court was entitled to find that the Bogstad financial statement had not been proved materially false. Thus, it was correct to find that the requirements for an exception to discharge under Code section 523(a)(2)(B), 11 Ú.S.C. § 523(a)(2)(B), had not been met and to declare the debt dischargeable.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s false written financial statement to except the resulting debt from discharge.

G v. Moore Lumber Co. v. Day (In Re Day) · filed 1985-11-07(a)(2)(B)

This evidence is insufficient to establish the creditor’s reasonable reliance by clear and convincing evidence.

Section 523(a)(2)(B) excepts a debt from discharge when a creditor reasonably relies on a materially false written statement about the debtor’s financial condition made with intent to deceive.

Scarsdale National Bank & Trust Co. v. Switzer (In Re Switzer) · filed 1986-01-03(a)(2)(B)

Hence, the debtor’s obligation to Scarsdale arising out of this loan in the current amount of $13,330.49, is not dischargeable in accordance with the exception to discharge specified in 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) makes a debt nondischargeable when a creditor reasonably relies on a materially false written financial statement the debtor made with intent to deceive.

Pacific International Developers Corp. v. Sullivan (In Re Sullivan) · filed 1986-02-04(a)(2)(B)

I find and rule that the debtor obtained the restaurant by use of a materially false financial statement, which he caused to be made on false letterhead with the deliberate intent to deceive the plaintiffs, and they reasonably relied on that materially false financial statement in selling this restaurant and taking back purchase money paper. They would not have entered into the transaction but for the deliberate and willful false financial statement and, therefore, the judgment recovered on the note given for the balance of the purchase price is not dischargeable under 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written statement about financial condition that the creditor reasonably relies on and that the debtor makes with intent to deceive.

Municipal Credit Union v. Brown (In Re Brown) · filed 1986-01-07(a)(2)(B)

Based on the foregoing, the court finds that all of the elements of § 523(a)(2)(B) have been proven by clear and convincing evidence and the debt at issue is accordingly determined to be nondischargeable.

Section 523(a)(2)(B) requires a creditor seeking to except a debt based on a false written financial statement to prove intent to deceive and reasonable reliance.

Thorp Credit Inc. v. Bright (In Re Bright) · filed 1986-01-24(a)(2)(B)

Therefore, it must be concluded that the Plaintiff has failed to adequately prove the element of 11 U.S.C. Section 523(a)(2) regarding intent to deceive. ... Having failed to take such measures, it must be concluded that the Plaintiff did not reasonably relied on the Debtor’s representations as to her collateral.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a false financial statement to prove actual and reasonable reliance on that statement.

Armstrong Rubber Co. v. Anzman (In Re Anzman) · filed 1986-02-13(a)(2)(B)

This Court cannot find reasonable reliance when, in light of the surrounding circumstances, Armstrong ignored available information or failed to seek information from sources that are commonly used. Armstrong has failed to meet its burden of proof of reasonable reliance under Section 523(a)(2)(B).

Section 523(a)(2)(B) requires the creditor to prove that it relied on a false written financial statement made by the debtor.

Hunter-Douglas, Inc. v. Cook (In re Cook) · filed 1986-03-11(a)(2)(B)

The Court cannot find the necessary reliance required by the statute, assuming that a false statement or false representations were in fact made.

Section 523(a)(2)(B) treats a creditor’s failure to make even a minimal investigation of a debtor’s financial statement as prima facie evidence that reliance on it was unreasonable.

Oppenheimer v. Reder (Reder) · filed 1986-04-01(a)(2)(B)

If a creditor fails to even minimally investigate the information contained in a debtor’s financial statement, such a failure will be prima facie evidence that the creditor’s reliance on that financial statement was unreasonable.

Section 523(a)(2)(B) excepts from discharge a debt obtained through a materially false written statement about financial condition that the creditor reasonably relied on and that the debtor caused to be made with intent to deceive.

Chrysler Capital Corp. v. Salzman (In Re Salzman) · filed 1986-06-09(a)(2)(B)

The debtors’ obligations to the plaintiff in the sum of $97,003.61 was shown by clear and convincing evidence to constitute a debt for money, or an extension, renewal, or refinancing of credit, which was obtained from the plaintiff by use of statements in writing that were materially false, respecting the financial condition of the debtors’ corporation, BFM, on which the plaintiff reasonably relied, and that the debtors caused such statements in writing to be made and assigned to the plaintiff with intent to deceive the plaintiff and which, in fact, did deceive the plaintiff to its detriment, within the meaning of 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a statement about the debtor’s financial condition to be in writing before it can support a finding that a debt is nondischargeable.

Connecticut National Bank v. Panaia (In Re Panaia) · filed 1986-06-19(a)(2)(B)

Section 523(a)(2)(B) requires that, in order for a debt to be declared nondis-chargeable due to a debtor’s allegedly false statements respecting his financial condition, those statements must be in writing. In the present case, the debtor’s statements, even assuming they were false and although made under oath, were oral. Accordingly, the Court will enter, concurrent with this memorandum, an order dismissing the Bank’s complaint with prejudice.

Grossly reckless omissions from a financial statement satisfy § 523(a)(2)(B)’s intent-to-deceive requirement.

Knoxville Teachers Credit Union v. Parkey · filed 1986-05-12(a)(2)(B)

At a minimum, defendant’s omissions were grossly reckless, which grossly reckless conduct satisfied the element of intentional deception embodied in the statute.

Section 523(a)(2)(B) requires a creditor to make a reasonable inquiry before relying on a debtor’s written financial statement, but does not require every possible inquiry.

Signal Finance v. Icsman (In Re Icsman) · filed 1986-05-14(a)(2)(B)

While the provisions of 11 U.S.C. Section 523(a)(2)(B) impose upon a creditor the duty to make reasonable inquiry, they do not require a party to make all possible inquiries.

Section 523(a)(2)(B) does not require a lender to verify a borrower’s financial statement, but a lender cannot reasonably rely on it when information the lender has obtained contradicts it.

Barnett Bank of South Florida, N.A. v. Guistolisi (In Re Guistolisi) · filed 1986-06-03(a)(2)(B)

Neither the statute nor anything in its legislative history indicates that a lender is under a burden to verify a borrower’s personal financial statement. Of course, it is free to do so and to the extent that it does so, it cannot reasonably rely upon a statement which is at variance with the information it has obtained from other sources.

Section 523(a)(2)(B) requires a creditor seeking to prevent discharge based on a written representation to prove material falsity, intent to deceive, and reasonable reliance.

Pioneer Bank & Trust Co. v. Niemiec (In Re Niemiec) · filed 1986-05-14(a)(2)(B)

Under Section 523(a)(2)(B), to prevent discharge, Pioneer must prove that (1) Niemiec’s representation about the security interest was “materially” false; (2) that Niemiec made the written representation with intent to deceive; and (3) that Pioneer “reasonably relied” upon the written representation in refinancing the loan.

Section 523(a)(2)(B) can make a debt arising from a residential lease nondischargeable when the tenant obtains possession through materially false written financial statements on which the landlord reasonably relies.

Barwick v. Brewer (In Re Brewer) · filed 1986-06-19(a)(2)(B)

A debt for this property right may be held to be nondischargeable if incurred through fraud and deceit under conditions described in 11 U.S.C. § 523(a)(2)(B). ... The plaintiff’s allowable claim against the debtor to the extent of $8473.16 is nondischargeable in accordance with the provisions of 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor to prove reliance on a debtor’s written financial statement to except the debt from discharge.

Town & Country Bank v. Crawford (In Re Crawford) · filed 1986-06-27(a)(2)(B)

Reliance is a question of fact. This court does not have a definite and firm conviction that the court below was wrong in finding a lack of reliance. Therefore, the decision in favor of the debtor on the 11 U.S.C. § 523 claim is affirmed.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a false written statement to except a debt from discharge.

Miami Employees Federal Credit Union v. Turner (In Re Turner) · filed 1987-02-17(a)(2)(B)

Another element which must be proved in order to make out a prima facie case pursuant to § 523(a)(2)(B) is that of reasonable reliance by the creditor upon the false statement.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written statement about financial condition, made with intent to deceive and reasonably relied on by the creditor.

Household Finance Corp. v. Howard (In Re Howard) · filed 1987-01-30(a)(2)(B)

Having found the financial statement was materially false and made with an intent to deceive, the Court next turn to the issue of whether HFC reasonably relied thereon. ... Based on the foregoing the Court finds that HFC’s reliance on the Debtor’s financial statement was reasonable. ... The Court therefore holds that the indebtedness of the Debtor to HFC is excepted from the Debtor’s general discharge in Bankruptcy pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires proof that the debtor’s written financial statement was materially false and that the creditor relied on it to extend credit.

Enterprise National Bank v. Zakovich (In Re Zakovich) · filed 1987-03-27(a)(2)(B)

Accordingly, we conclude that Enterprise failed to prove by clear and convincing evidence that Zakovich’s financial statement was false, or that Enterprise relied on that statement in extending credit to the debtor. Therefore, the debt in question is not excepted from discharge under 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor claiming fraudulent misrepresentation to prove reasonable reliance on the debtor’s representation.

Lawyers Title Insurance v. Dallam (In Re Dallam) · filed 1987-04-03(a)(2)(B)

Title 11 U.S.C.A. § 523(a)(2)(B) lists the elements of fraud that must be proven before a debt becomes non-dischargeable due to fraud, and courts have developed a five-part test for determining non-dis-chargeability based upon the statute. ... Lawyers Title was required to demonstrate that it knew of the no debt representation, that it relied on the representation and that such reliance was reasonable.

Section 523(a)(2)(B) does not require a creditor to independently investigate a debtor’s financial statement to establish reasonable reliance.

F & M Marquette National Bank v. Richards (In Re Richards) · filed 1987-04-14(a)(2)(B)

Congress, by using the term, “reasonably relied” in § 523(a)(2)(B), intended only that reliance not be successfully asserted in bad faith as a matter of convenience after the fact to avoid dischargeability. It did not intend to make dischargeable a dishonest debt simply because the victim of the fraud might have been gullible or negligent in the transaction.

Section 523(a)(2)(B)(iii) requires a creditor seeking to except a debt based on a false financial statement to prove reasonable reliance; red flags calling for further inquiry can defeat that showing.

Calumet National Bank v. Gallagher (In Re Gallagher) · filed 1987-04-22(a)(2)(B)(iii)

In the instant proceedings, Calumet has failed to sustain its clear and convincing burden of proof of reasonable reliance when they failed to recognize the red flags signalling its call to their duty of reasonable inquiry into the circumstances surrounding the granting of the loan and its renewals.

Section 523(a)(2)(B) bars discharge of a debt when a debtor intentionally omits a material debt from a written loan application and the lender relies on the omission in extending credit.

Indian Head National Bank v. Mitchell (In Re Mitchell) · filed 1987-06-04(a)(2)(B)

That the debtor failed to list the second mortgage debt on the application, despite three separate places where it should have been listed on thé form, in the foregoing circumstances, is sufficient in my judgment to bar discharge of the debt to the plaintiff Bank.

Section 523(a)(2)(B) requires additional inquiry when a financial statement appears ambiguous or suspect and the parties have no previous ongoing business relationship.

National Bank of Petersburg v. Bonnett (In Re Bonnett) · filed 1987-06-24(a)(2)(B)

We do not hold that independent verification of a financial statement is necessary in every instance. ... However, when there is no previous ongoing business relationship between the parties and the information on the financial statement would lead a reasonable person to believe that the statement may be ambiguous or suspect, additional inquiry is necessary.

A creditor’s failure to verify a written financial statement does not necessarily make its reliance unreasonable under § 523(a)(2)(B).

In re John T. LANSFORD and Cecily S. Lansford, Debtors. · filed 1987-07-22(a)(2)(B)

We cannot credit Lansford's argument that La Trattoria's reliance on the financial statement was unreasonable because of its failure to verify the information in the financial statement. The financial statement was given in response to La Trattoria's stated desire to deal with a financially secure buyer. Having intentionally misled the sellers in an area he knew was important to them, it is unseemly for Lansford now to argue that he should be excused from section 523 because the sellers believed him.

A creditor’s reliance on a debtor’s false financial statement can be reasonable under § 523(a)(2)(B) even when reasonable verification efforts fail to uncover the fraud.

La Trattoria, Inc. v. Lansford · filed 1987-07-22(a)(2)(B)

We cannot credit Lansford’s argument that La Trattoria’s reliance on the financial statement was unreasonable because of its failure to verify the information in the financial statement. ... Although these measures were ultimately insufficient to uncover the fraud, they were certainly reasonable under the circumstances.

Section 523(a)(2)(B) can make an entire refinanced debt nondischargeable based on a false financial statement, but the creditor must prove reliance on the statement as to the refinanced portion.

Household Finance Corp. v. Greenidge (In Re Greenidge) · filed 1987-07-09(a)(2)(B)

This Court believes that the better view is that a false representation in connection with a renewal or refinancing of credit may render the entire debt nondischargeable. However, reliance on the false financial statement must be shown as to the refinancing for the refinanced portion to be nondischargeable.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a written statement about the debtor’s financial condition to except a debt from discharge.

Commercial Credit Corp. v. Sawyer (In Re Sawyer) · filed 1987-07-27(a)(2)(B)

Of greater weight, however, is the total failure of the Plaintiff to prove that it “reasonably relied” on the Statement of Obligations provided by the Debtors. Sufficient evidence exists to prove that the Plaintiff’s agent had approved the loan to the Debtors long before they arrived at the Plaintiff’s office.

A written pledge of stock already pledged to another lender can be a false statement under § 523(a)(2)(B)(i) because it implies the stock is unencumbered.

United Virginia Bank v. Dishaw (In Re Dishaw) · filed 1987-09-23(a)(2)(B)(i)

Regardless of the possible false representation regarding ownership of the stock, Dishaw’s stock pledge rests on an implied assertion that the stock was not already pledged as security for another debt. ... Under the rule of the Madore case, this misrepresentation is also a false statement within section 523(a)(2)(B)(i).

Section 523(a)(2)(B) requires the creditor to reasonably rely on the debtor’s financial statement when deciding to extend credit.

ITT Financial Services, Inc. v. Lowery (In Re Lowery) · filed 1987-10-09(a)(2)(B)

However, in order to satisfy the third element, the plaintiff must have reasonably relied on the financial statement in making the decision to loan the money or extend the credit to the defendant. ... Accordingly, under the circumstances of this case, the Court cannot find that creditor reasonably relied upon the presence or absence of credit information in the written loan application.

Section 523(a)(2)(B) requires a creditor relying on a false financial statement to prove reasonable reliance; a creditor cannot ignore adverse information in credit reports it obtained.

Security Federal Credit Union v. Carter (In Re Carter) · filed 1987-10-27(a)(2)(B)

Finally, when, as here, the credit extender has in fact obtained a credit report, it may not ignore the derogatory credit information derived therefrom and claim that it relied only on the financial statement provided by the debtor.

Section 523(a)(2)(B) does not require a creditor to independently verify a debtor’s financial statement when the creditor reasonably relies on an intentionally false statement.

Earls v. Southgate Bank & Trust Co. (In Re Earls) · filed 1987-11-12(a)(2)(B)

Having considered the Stout notion of a duty owed by the recipient of a financial statement, this Court rejects the doctrine as unsound. ... The $40,000.00 debt owed to the bank is nondischargeable under 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires the creditor to have relied on the debtor’s false written financial statement in advancing the debt it seeks to except from discharge.

Eagle National Bank of Miami v. Rainerman (In re Rainerman) · filed 1987-12-21(a)(2)(B)

The additional $21,-900.00 was not advanced to the plaintiff based upon the reliance of the financial statements and accordingly, the plaintiff is not entitled to an order determining the $21,900.00 to be nondischargeable.

Section 523(a)(2)(B) does not require a creditor to prove damages to establish that a debt is nondischargeable.

F & M Marquette National Bank v. Richards (In Re Richards) · filed 1987-12-31(a)(2)(B)

A nondischargeability action under § 523(a)(2)(B) is not an action for damages. As it pertains here, it is an action for determination of nondischargeability of a debt of an extension, renewal, or refinancing of credit obtained by the use of a false financial statement. Nowhere in the statute is the term “damages” used. It is not an element of the cause of action. Accordingly, Marquette has no burden of proof regarding damages.

Section 523(a)(2)(B) can treat a creditor’s decision to forgo acceleration in reasonable reliance on an intentionally false written financial statement as an extension of credit; the resulting injury may be nondischargeable if the creditor proves the required elements.

Marine Bank Southwest N.A. v. Hoffman (In Re Hoffman) · filed 1988-01-04(a)(2)(B)

The Bank looked at the financial statement Hoffman had given it and reasonably relied on it in exercising its right to not accelerate the loan and call for immediate repayment of the loan and the guaranty, believing it had a solvent guarantor. As a result of failing to accelerate the note and call the loan in and to enforce the guaranty the bank was injured. If the Bank can prove all of the foregoing by clear and convincing evidence, the amount of injury it suffered from its failure to enforce the guaranty at the time of the false financial statement is nondischargeable under § 523(a)(2)(B).

Section 523(a)(2)(B) requires reasonable reliance on a written financial statement to except a debt from discharge; a creditor’s reliance is unreasonable when it accepts an unqualified customer’s valuation of major assets without adequate verification.

Bank of Coral Gables v. Picou (In Re Picou) · filed 1988-01-08(a)(2)(B)

The Bank’s reliance must be deemed unreasonable where, as here, the unlisted securities comprising a substantial portion of the assets listed on the financial statements were not verified by an accepted business source of appraisal, but were verified instead by the word of another Bank customer with no known expertise in the valuation of unlisted securities. ... Based on the foregoing, the Court finds that the debt is dischargeable and 11 U.S.C. § 523(a)(2)(B) is inapplicable.

Section 523(a)(2)(B) requires a creditor to prove it relied on a false financial statement when extending, renewing, or refinancing credit.

International Bank of Miami, N.A. v. Figueredo (In Re Figueredo) · filed 1988-03-10(a)(2)(B)

It is plaintiff’s burden under § 523(a)(2)(B) to prove that at least one of these statements (1) is “materially false”, (2) that it “reasonably relied” upon the statement, (3) in the “extension, renewal, or refinancing of credit”, and that (4) each debtor “caused [the statement] to be made or published with intent to deceive”. ... Both statements were materially false and each debtor caused each statement to be made and published with an actual intent to deceive the plaintiff. However, I find that the plaintiff did not in fact rely upon either statement in either the extension, renewal, or refinancing of credit to the corporation.

Section 523(a)(2)(B) requires a creditor to prove actual and reasonable reliance on a false financial statement to except the debt from discharge.

Franklin State Bank v. Lippert (In Re Lippert) · filed 1988-04-12(a)(2)(B)

Franklin Bank has simply failed to establish, by the requisite standard of proof, that it relied on the financial statements, rather than on Lippert’s cash flow and its own security interest in Lippert’s farm machinery, equipment and vehicles, and, that, if it relied, such reliance was reasonable.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a false written financial statement to except a debt from discharge.

Credithrift of America v. Greene (In Re Greene) · filed 1988-04-26(a)(2)(B)

The reasonableness of a creditor’s reliance normally is measured by the thoroughness of the creditor in attempting to verify the debtor’s representations. ... CTA did not bear its burden of producing clear and convincing evidence proving reasonable reliance upon the Debtor’s misrepresentations.

Section 523(a)(2)(B) bars discharge of a debt obtained through a materially false written statement about financial condition that the creditor reasonably relied on and the debtor caused to be made with intent to deceive.

Jefferson Bank of Missouri v. Trippensee (In re Trippensee) · filed 1988-06-03(a)(2)(B)

The Court finds that each element of § 523(a)(2)(B) has been established.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written statement about financial condition that the creditor reasonably relies on and the debtor makes with intent to deceive.

Kemba Columbus Credit Union, Inc. v. Short (In re Short) · filed 1988-06-06(a)(2)(B)

Based upon the foregoing, the Court concludes that Kemba has demonstrated the existence of all the elements required by 11 U.S.C. § 523(a)(2)(B). The Court finds, therefore, Debtor’s obligation to Kemba is non-dischargeable.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through an intentionally deceptive, materially false written statement about financial condition on which the creditor reasonably relied.

Norbank v. Kroh (In Re Kroh) · filed 1988-06-17(a)(2)(B)

18. The elements which plaintiff must establish under 11 U.S.C. § 523(a)(2)(B) are: (1) a debt for money, or an extension, renewal or refinancing of credit, obtained by (2) defendant’s use of a statement in writing, (3) that is materially false, (4) respecting debtor’s or an insider’s financial condition; (5) on which statement plaintiff reasonably relied, and (6) which statement debtor caused to be made or published with intent to deceive. Plaintiff has established these elements by clear and convincing evidence.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written statement about financial condition that the creditor reasonably relies on and that the debtor makes with intent to deceive.

Capital City Bank & Trust v. Kroh (In Re Kroh) · filed 1988-06-23(a)(2)(B)

For these reasons the Court holds that John’s debt to the Bank is nondis-chargeable pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) permits intent to deceive to be inferred from reckless disregard for the accuracy of a financial statement; the lender must also have reasonably relied on it.

Lawter International, Inc. v. Pryor (In Re Pryor) · filed 1988-06-30(a)(2)(B)

The stipulations identified demonstrate a reckless disregard for accuracy in these financial statements and demonstrate intent to deceive, regardless of whether at the time of submittal, Debtor believed he intended to pay back the loans. ... Lawter’s reliance was reasonable under the circumstances.

Section 523(a)(2)(B) requires reasonable reliance on a written statement about the debtor’s financial condition; reliance on statements with obvious omissions and inconsistencies is unreasonable.

Syracuse Savings Bank v. Weiner (In Re Weiner) · filed 1988-06-08(a)(2)(B)

Under the circumstances as presented, Plaintiff’s reliance on the financial statement and loan application was not reasonable. Since the evidence fails to satisfy all required elements, Plaintiff’s judgment against Debtor is not a debt within the parameters of non-dischargeability set forth in Section 523(a)(2)(B) of the Bankruptcy Code.

Section 523(a)(2)(B) makes a loan debt nondischargeable when the debtor obtains it through false written financial statements intended to deceive a lender that reasonably relies on them.

United States v. Perea (In re Perea) · filed 1988-07-18(a)(2)(B)

Mr. Perea obtained $380,000 from the Bank and SBA by false representations and by the use of false written statements respecting his financial condition as well as the financial condition of Perea and Associates, P.C. Consequently, his entire debt to SBA and the Bank is nondischargeable pursuant to section 523(a)(2)(B).

Section 523(a)(2)(B) can apply to an unsigned financial statement that the debtor authorized an agent to use in obtaining a loan.

Capital City Bank & Trust v. Kroh (In Re Kroh) · filed 1988-07-08(a)(2)(B)

However, George authorized John to use the financial statement in obtaining loans and therefore can be fairly said to have “adopted and used” the statement even though his signature did not appear on it.

Section 523(a)(2)(B)(iii) requires a creditor to prove actual and reasonable reliance on a false financial statement to except a debt from discharge.

Landmark Leasing Inc. v. Martz (In Re Martz) · filed 1988-07-22(a)(2)(B)(iii)

In order to prevail under § 523(a)(2)(B), a creditor must prove by clear and convincing evidence that it reasonably relied on the misstatement. ... The creditor must both show that it actually relied upon the misstatement and that such reliance was reasonable. We find that the creditor here has failed to establish either component as to the omitted mortgages or the omitted contingent liabilities.

Section 523(a)(2)(B) requires a creditor seeking to except a debt based on a false written financial statement to prove reasonable reliance on that statement.

Soft Sheen Products, Inc. v. Johnson (In Re Johnson) · filed 1988-07-27(a)(2)(B)

In order for Soft Sheen to sustain a claim pursuant to section 523(a)(2)(B) it must prove by clear and convincing evidence that both Percy Johnson and Gloria Johnson: 1) made a statement in writing; 2) that is materially false; 3) respecting their financial condition; 4) made with the intent to deceive and 5) on which Soft Sheen reasonably relied. ... However, the Court finds that Soft Sheen did not reasonably rely on the financial statement furnished by Percy Johnson.

Section 523(a)(2)(B) requires proof of reasonable reliance on the debtor’s materially false written statement.

Tamarkin v. Wells (In Re Wells) · filed 1988-07-27(a)(2)(B)

A winning case under § 523(a)(2)(B) requires proof of reasonable reliance on the debtor’s materially false written statement.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written financial statement intended to deceive the creditor and reasonably relied on by the creditor.

M & I Northern Bank v. Meyer (In Re Meyer) · filed 1988-07-28(a)(2)(B)

Thus, the bank proved by clear and convincing evidence that Meyer prepared and gave the bank a writing; that Meyer intended to deceive the bank by falsely representing in his financial statements that he owned Center Street real estate valued at more than half of his bank debt; that the misrepresentation of Meyer’s interest in real estate was material because it made Meyer’s assets appear to be greater than they were and prevented the bank from realistically assessing its risk; and that the bank reasonably relied on Meyer’s financial statements when extending credit in June, July and August of 1985.