11 U.S.C. § 523

Section 523(a)(2)(B) requires proof that the debtor obtained money, property, services, or credit through a materially false written financial statement made with intent to deceive and reasonably relied on by the creditor.

Mortgage Guaranty Insurance v. Pascucci (In Re Pascucci) · filed 1988-08-03(a)(2)(B)

The Court finds the evidence clear and convincing that the written financial statement was materially false concerning the debtors’ financial condition in that it failed to list the Bell Canyon property and its encumbrances, that MGIC relied on it, and that its loss was proximately caused by the false financial statement. However, the Court finds that MGIC does not satisfy the remaining elements under section 523(a)(2)(B): MGIC has not shown that the debtors obtained money, property, services or credit from it, that they intended to deceive MGIC, or that MGIC reasonably relied on the debtor’s financial statements.

Section 523(a)(2)(B) requires reasonable reliance on a debtor’s financial statement; a commercial lender that knows the statement omits judgment liens cannot reasonably rely on it without making a commercially reasonable inquiry.

Citizens State Bank v. Jacox (In Re Jacox) · filed 1988-08-10(a)(2)(B)

The Bank had knowledge that some judgment liens existed at the time the financial statements were prepared and signed. The Bank thus knew that the financial statements contained false representations concerning judgment liens. Under these circumstances, a commercial institutional lender cannot reasonably rely upon the financial statements.

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

Northern Trust Bank of Florida, N.A. v. Lawrence (In re Lawrence) · filed 1988-09-09(a)(2)(B)

I find no use of a materially false written statement on which the lender reasonably relied that the debtor caused to be made or published with intent to deceive. Plaintiff has failed to carry its burden of establishing a basis for the exception of its claim from discharge under § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s financial statement; the circumstances may require the creditor to verify its contents.

Federal Deposit Insurance v. Smigel (In Re Smigel) · filed 1988-09-12(a)(2)(B)

The FDIC has failed to establish that the Court erred as a matter of law in its determination that Drovers’ failure to verify the debtor’s financial statement was unreasonable under the circumstances.

Section 523(a)(2)(B) treats an omission in a debtor’s financial statement as material if the truth would have dissuaded the creditor from making the loan, even if the omission caused no apparent harm.

Haxby v. National Boulevard Bank of Chicago · filed 1988-09-16(a)(2)(B)

Even if a misstatement or omission in a loan application causes no apparent harm to a lender, such a misrepresentation is material if knowledge of the debtor’s true financial condition would have dissuaded the lender from making the loan in the first place.

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

Household Finance Co. v. Winter · filed 1988-09-22(a)(2)(B)

Under the circumstances, HFC has not shown that it reasonably relied on the written statement of the Debtor before approving the loan. HFC made no showing either of intent to deceive or how the omitted information affected the approval of the loan.

Section 523(a)(2)(B) requires reasonable reliance on a false financial statement; a lender’s customary credit checks can satisfy that requirement when they reveal no signs of fraud.

Federal Deposit Insurance Corp. v. Figge (In Re Figge) · filed 1988-10-31(a)(2)(B)

The real issue under section 523(a)(2)(B) was whether ISSB reasonably relied on the financial statement. ... Under the circumstances, ISSB’s reliance on the Figges’ financial statement was reasonable.

Section 523(a)(2) excludes statements about a debtor’s financial condition from paragraph (A) and requires such statements to be written to prevent discharge under paragraph (B).

Chrysler First Financial Services Corp. v. Rhodes (In Re Rhodes) · filed 1988-12-01(a)(2)

Section 523(a)(2)(A) states unequivocally that it does not apply to statements regarding a debtor’s financial condition. False statements about a debtor’s financial condition are dealt with separately in § 523(a)(2)(B). There, such statements are subject to the requirements set forth in that section — one of which mandates that the statement be in writing in order to be actionable.

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

Kunzler v. Bundy (In Re Bundy) · filed 1989-01-17(a)(2)(B)(iii)

Because the Court finds that Plaintiff did not reasonably rely upon Debtors’ financial statement as required under § 523(a)(2)(B)(iii), the debt is not excepted from discharge and the Court need not consider whether Debtors had any intent to deceive.

Section 523(a)(2)(B) requires a creditor seeking to except a debt from discharge based on a false financial statement to show that it actually and reasonably relied on the statement.

Liberty National Bank v. Wing (In Re Wing) · filed 1989-02-09(a)(2)(B)

The Court finds that the plaintiff did not rely totally or partially upon the financial information supplied by the defendant. ... This is not the reliance required under § 523(a)(2)(B) (iii).

Section 523(a)(2)(B) treats the omission of a substantial debt as a material misrepresentation when it substantially distorts the debtor’s financial picture.

First Interstate Bank of Nevada v. Greene (In Re Greene) · filed 1989-02-10(a)(2)(B)

Therefore, the omission of the NFT Loan from the debtor’s financial statements substantially distorted the debtor’s financial picture and constituted a material misrepresentation.

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

Davies v. Albanese (In Re Albanese) · filed 1989-02-13(a)(2)(B)

In order for a creditor to prevail under § 523(a)(2)(B), it is sufficient for a creditor to establish that there was a false financial statement made, with actual intent to defraud on which the lender relied and that the reliance was reasonable.

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.

Standard Federal Bank v. Compton (In Re Compton) · filed 1989-03-28(a)(2)(B)

Accordingly, the court finds that the Defendant obtained a loan from the Bank in the amount of $14,500.00 by materially misrepresenting her debts by more than $22,-000.00 in a written statement on which the Bank reasonably relied, with intent to deceive the Bank whereby the Bank suffered a loss when the Defendant defaulted on the loan that was the proximate result of the publication of the financial statement. Because the Bank has prevailed under 11 U.S.C. § 523(a)(2)(B), discussion of its alternate theories of recovery under § 523(a)(2)(A) and (a)(6) is unnecessary.

Section 523(a)(2)(B) requires a creditor to reasonably rely on a written financial statement; reliance is unreasonable when the creditor’s own credit check reveals that the statement omits creditors.

Commercial Credit Plan v. Carter (In Re Carter) · filed 1989-02-28(a)(2)(B)

In this case, the Plaintiff was on notice that the credit application was potentially incomplete due to the fact that the three creditors not included on the credit application were revealed by the Plaintiff’s independent investigation through the credit check. At this point, reliance upon the credit application cannot be deemed reasonable. Thus, this element must also be considered unsatisfied.

A creditor does not reasonably rely on a loan application when its own credit check reveals omitted debts and it makes the loan anyway.

Signal Consumer Discount Co. v. Malachosky (In Re Malachosky) · filed 1989-03-21(a)(2)(B)(iii)

Title 11 U.S.C. § 523(a)(2)(B)(iii) states that the use of a writing must be one “on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied”. Signal’s own credit verification process indicated that this Debtor had not listed all debts on the application but Signal saw fit to make the loan as well as to pay debts which were not on the application but were on the credit report. Therefore, any reliance that this creditor placed on the loan application was not reasonable.

A debtor need not receive loan proceeds personally for § 523(a)(2)(B) to apply when the debtor benefits from a corporate loan obtained through a false financial statement.

Republic Bank v. Vermont (In Re Vermont) · filed 1989-03-23(a)(2)(B)

The better view appears to be that the debtor need not actually procure the money or property for himself, but if the debtor benefits in some way from the property obtained through his deception, the debt is nondischargeable.

Section 523(a)(2)(B) excepts a debt from discharge when credit is obtained through a materially false written financial statement made with intent to deceive and on which the creditor reasonably relies.

NCNB National Bank of Florida v. Sofro (In Re Rental Journal, Inc.) · filed 1989-09-01(a)(2)(B)

The elements required under § 523(a)(2)(B) are: that a debt exists as a result of obtaining money or credit; the money or credit was obtained by financial statement in writing; the financial statement is materially false concerning the financial condition of the debtor; financial statement was made or published with intent to deceive NCNB; NCNB relied upon the financial statement in extending money or credit; and NCNB's reliance on the financial statement was reasonable. ... As set forth herein, the Court finds that NCNB’s objection to Eli Sofro’s discharge pursuant to 11 U.S.C. § 523(a)(2)(B) is sustained.

Section 523(a)(2)(B) requires a materially false financial statement; an inaccuracy is immaterial if it would not have affected the creditor’s lending decision.

Harbor Federal Savings & Loan Ass'n v. DiMarco (In re DiMarco) · filed 1989-08-30(a)(2)(B)

Assuming the falsehoods with respect to the New Jersey property and the boat, with a total value of $225,000, the misrepresentations were not material. I believe that the relatively small amount of money involved in these two assets, even if they had been omitted entirely from this financial statement, would not have caused this creditor to deny the loan or the refinancing coupled with the additional $10,000 advance.

Section 523(a)(2)(A) excludes statements about the financial condition of a corporation controlled by the debtor; a claim based on such a statement must proceed under § 523(a)(2)(B).

Will Rogers Bank & Trust Co. v. Watson (In Re Watson) · filed 1989-09-08(a)(2)(A)

Similar facts exist in this case and thus we find that the Plaintiff may not proceed pursuant to 11 U.S.C. § 523(a)(2)(A), but rather is limited to an action pursuant to § 523(a)(2)(B) and the elements presented therein.

Section 523(a)(2)(B) requires proof that the debt arose from reliance on a materially false written statement about the debtor’s financial condition; an unexplained state court verdict does not establish that basis for nondischargeability.

Tatavitto v. Ferruzza (In Re Ferruzza) · filed 1989-11-30(a)(2)(B)

More importantly, there was no proof that the jury verdict arose out of the use of a statement in writing that was materially false respecting the debtor’s financial condition on which the plaintiff relied. Indeed, although 11 U.S.C. § 523(a)(2)(B), which was specifically referred to in paragraph # 1 of the complaint, relates to a statement in writing respecting the debtor’s financial condition, there was no proof that this issue was the basis for the plaintiff’s jury verdict against the debtor.

Section 523(a)(2)(B) makes a debt nondischargeable when a debtor uses a written private placement memorandum to conceal an insider’s liabilities and fraudulently induce an investment.

Hill v. Der (In Re Der) · filed 1990-03-05(a)(2)(B)

The debtor’s fraudulent conduct in publishing the Eagle private placement memorandum renders the underlying debt nondischargeable under Section 523(a)(2)(B). The memorandum misrepresented the reason Eagle Associates was created and omitted and concealed the liability incurred by investors with the purpose of fraudulently inducing the plaintiffs to invest their funds.

Section 523(a)(2)(B) assesses a written financial statement’s accuracy and the creditor’s reliance when the statement was presented; later events do not make an initially accurate statement materially false.

Illinois Ex Rel. Illinois Department of Public Aid v. Hatcher (In Re Hatcher) · filed 1990-03-06(a)(2)(B)

Section 523(a)(2)(B) looks at the accuracy of the financial statement and reliance on it at the time it was presented, not whether subsequent events máke the statement inaccurate at some later time.

Section 523(a)(2)(B) requires a creditor to prove that the debtor obtained money or credit through a written financial statement on which the creditor relied.

ITT Commercial Finance Corp. v. Walz · filed 1990-05-07(a)(2)(B)

Thus, it is not proven that this debtor either obtained money or an extension of credit as a result of the statement. Secondly, plaintiff presented absolutely no evidence of any reliance on the 1987 financial statements which reliance resulted in any advances of money or extensions of credit.

Section 523(a)(2)(B) allows a claim based on partial reliance on a financial statement, but the creditor must prove actual and reasonable reliance on the false statements.

Chrysler Credit Corp. v. Ruwart (In Re Ruwart) · filed 1990-05-31(a)(2)(B)

Although even partial reliance on the debtor’s financial statements can support a creditor’s claim under § 523(a)(2)(B), when a decision to make a loan is based upon certain statements that are true and certain statements that are materially false, the creditor must demonstrate actual and reasonable reliance as to the false statements.

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

Founders Bank of Arizona v. Moore (In Re Moore) · filed 1990-07-05(a)(2)(B)

The Plaintiff did not meet its burden of proof under § 523(a)(2)(B). The March 1, 1987 financial statement was materially false. It related to TGM’s financial condition. The Plaintiff did not reasonably rely thereon. There was insufficient proof by the Plaintiff that the Defendants caused same to be made or published with intent to deceive.

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 that the debtor made or published with intent to deceive.

Jaress Truck Centers, Inc. v. Hodges (In Re Hodges) · filed 1990-07-11(a)(2)(B)

Plaintiff’s liability on the recourse loan and Debtor’s intent to deceive evidenced by the financial statement provided plaintiff and upon which plaintiff reasonably relied, permit judgment on plaintiff's complaint, excepting the debt from discharge.

Section 523(a)(2)(B) requires the creditor to prove that it used and reasonably relied on the debtor’s financial statement and that the debtor caused its publication with intent to deceive.

Southeast Associates of Durham v. Jacobe (In Re Jacobe) · filed 1990-09-10(a)(2)(B)

Delta Square’s case must fail because at least three essential elements of § 523(a)(2)(B) have not been established. It has not been shown (1) that the debt was obtained by the plaintiff creditor’s use of Jaeobe’s financial statement, (2) that the plaintiff reasonably relied upon Jacobe’s financial statement in entering into the lease, or (3) that Jacobe caused his statement to be published with the intent to deceive the plaintiff.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive when making a false written statement about financial condition; diminished mental capacity can defeat that showing.

First Bank v. Colvin (In Re Colvin) · filed 1990-08-02(a)(2)(B)

The Plaintiff offers no evidence tending to refute Debtor/Defendant’s affirmative defense of diminished mental capacity. Accordingly, the Court finds that the Plaintiff has failed to establish that the Debtor submitted the financing statement with the intent to deceive. Therefore, the Plaintiff’s petition to determine the dischargeability of the debt owed it by Debtor/Defendant must be DENIED.

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

Cadle Co. v. Spilotros (In Re Spilotros) · filed 1990-08-08(a)(2)(B)

All elements, including reasonable reliance, must ... be proven by Plaintiff for a debt to be declared nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) can apply when a debtor gives false financial information by telephone and causes it to be recorded in a written credit application.

Chevy Chase Federal Savings Bank v. Graham (In Re Graham) · filed 1990-10-17(a)(2)(B)

Defendants caused a written statement regarding their financial condition to be published by providing plaintiff’s telephone solicitor the financial information contained on the written application for a credit card. A written statement does not have to be physically prepared by a defendant. The requirements of § 523(a)(2)(B) are met if the existence of a written statement was caused to be prepared by the defendant.

Section 523(a)(2)(B)(iii) requires reasonable reliance on a written statement; a creditor who knows the statement is false cannot reasonably rely on it.

Teates v. Kuranda (In Re Kuranda) · filed 1990-09-28(a)(2)(B)(iii)

Since Teates has not established reasonable reliance on the short form waiver, this court must rule in favor of the debtor on the issue of dischargeability under § 523(a)(2)(B).

Section 523(a)(2)(B) does not require a creditor to verify a financial statement solely because the creditor and debtor lack an ongoing business relationship.

Arkansas Aluminum Alloys, Inc. v. Hicklin (In Re Hicklin) · filed 1990-10-04(a)(2)(B)

Such is not the applicable rule. The Tenth Circuit in Mullet recognized an “ongoing business relation” as merely one of four factual situations where a duty to verify would not be imposed. Thus, Dr. Hicklin’s argument for a different rule is without merit.

Section 523(a)(2)(B) requires a materially false written statement about the debtor’s or an insider’s financial condition, reasonable reliance by the creditor, and intent to deceive.

Bencharge Credit Service v. Lipke (In re Lipke) · filed 1991-02-08(a)(2)(B)

The terms of this subsection clearly are intended to be read conjunctively. Reliance on a written statement is only one of several necessary elements. The statement must also be materially false, must relate to the debtor’s financial condition, and must have been made with intent to deceive. There are no facts, or even allegations to support the elements of this type of discharge exemption, and we are puzzled as to the proffered application of this section to the case at bar.

Section 523(a)(2)(B) requires a written statement with monetary information sufficient to assess financial responsibility; a note and mortgage do not qualify.

Old Kent Bank-Chicago v. Price (In Re Price) · filed 1991-01-18(a)(2)(B)

A statement in writing respecting an entity’s financial condition must be sufficient to determine financial responsibility. Typically, for businesses these are balance sheets, income statements and statements of changes in financial positions. For individuals, statements of income and expenses or schedules of assets and liabilities. All these require monetary figures so that the entity evaluating the other’s responsibility can determine whether there is a surplus of assets over liabilities or income over expenses.

Section 523(a)(2)(B) excepts a debt from discharge when a creditor reasonably relies in part on a materially false financial statement submitted with intent to deceive.

Texas American Bank, Tyler, N.A. v. Barron (In Re Barron) · filed 1991-01-30(a)(2)(B)

In summary, the Court is convinced that the officials at the financial institution relied in part on the materially false financial statements; the financial statements were filed with intent to deceive; and therefore, the debt of $73,599.46 is excepted from discharge under U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor to prove that it actually and reasonably relied on a false financial statement to except the resulting debt from discharge.

John Deere Co. v. Myers (In Re Myers) · filed 1991-02-19(a)(2)(B)

The final prong of § 523(a)(2)(B) requires Deere to demonstrate that it reasonably relied on the Debtor’s false financial statement. This provision of § 523 requires the Court to undertake a two-part analysis: (1) did the creditor actually rely on the financial statement; and (2) was the reliance reasonable?

Section 523(a)(2)(B) excepts a loan from discharge when the debtor obtains it through a materially false written financial statement that the creditor reasonably relied on and that the debtor provided with intent to deceive.

First Alabama Bank v. Bagwell (In Re Bagwell) · filed 1991-03-06(a)(2)(B)

Notwithstanding that, a due consideration of the 101% nose dive in the debtor’s net worth over a six-month period, in the light of the other evidence presented to the Court, results in the settling of a conviction upon the Court that the debtor intended that the bank be deceived by his substantially false financial statement and, thus, obtained a loan from the bank. ... The bank will recover a nondischargeable debt for the principal debt of $11,000.00, interest to date at the contract rate, and a filing fee of $120.00.

Section 523(a)(2)(B)(iii) permits reasonable reliance on an earlier financial statement for later loans when both borrower and lender understood it would be used for those loans.

Federal Deposit Insurance Corp. v. Figge · filed 1991-03-19(a)(2)(B)(iii)

We similarly find no error in the bankruptcy court's finding that ISSB's reliance on the June financial statement was reasonable, as required by section 523(a)(2)(B)(iii). ... We conclude that evidence presented at trial reveals that both the Figges and ISSB understood that the June statement was also to be used to obtain the November and December loans.

A financial statement with pertinent omissions can be materially false under § 523(a)(2)(B).

In the Matter of Robert P. Jordan, Debtor. Robert P. Jordan and Wesley Ann Jordan v. Southeast National Bank · filed 1991-03-28(a)(2)(B)

Finally, it is well-established that writings with pertinent omissions may qualify as “materially false” for purposes of § 523(a)(2)(B). ... We thus agree with the bankruptcy court that the Jordans provided Southeast with written financial documents that were “materially false.”

Section 523(a)(2)(B) covers materially false statements in written loan applications as well as formal financial statements.

Federal Deposit Insurance Corp. v. Lefeve (In Re Lefeve) · filed 1991-05-28(a)(2)(B)

Section 523(a)(2)(B) applies not only to documents styled as “Financial Statements”, but to any false statements made in written loan applications.

Section 523(a)(2)(B)(iv) requires intent to deceive; a debtor may rely on financial information from competent employees when there is no reasonable cause to suspect it is wrong.

Alside Supply Center Salt Lake City, Division of Alside Supply, Inc. v. Aste (In Re Aste) · filed 1991-06-11(a)(2)(B)(iv)

Without some reasonable cause to believe that the information is incorrect, incomplete, inconsistent, or subject to further inquiry, debtors should be able to rely upon the information obtained by competent, skilled employees responsible for performing that task.

Section 523(a)(2)(B)(iii) permits a creditor to establish actual reliance through partial reliance on a false financial statement; testimony from the person who approved the loan is not required.

Teachers Credit Union v. Johnson · filed 1991-07-08(a)(2)(B)(iii)

A showing of partial reliance is sufficient to satisfy § 523(a)(2)(B)(iii).

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on the debtor’s written financial statement; reliance on statements up to a year and a half old is unreasonable.

Barnett Bank of Marion County, N.A. v. Burnett (In Re Burnett) · filed 1991-07-22(a)(2)(B)

The testimony clearly shows that the plaintiff used financial statements up to one and a half years old in assessing its decision to extend additional credit to defendant. Reliance on such stale documents is unreasonable. ... However, plaintiff failed to meet its burden on the fourth element, reasonable reliance on the statements, and thus cannot prevail.

Section 523(a)(2)(B) treats an omission, concealment, or understatement of liabilities as a potentially materially false written statement about financial condition.

ITT Financial Services v. Torres (In Re Torres) · filed 1991-08-29(a)(2)(B)

Clearly, an omission, concealment, or understatement of liabilities can constitute a materially false statement.

Section 523(a)(2)(B) requires an alleged false representation about a debtor’s financial condition to be in writing.

Sarandon v. Marceca (In re Marceca) · filed 1991-09-30(a)(2)(B)

In its present posture, the complaint is insufficient in that the allegation as to the fraudulent representation as to the debtor's financial condition to perform the obligations he assumed under the settlement agreement does not satisfy the written documentation required under 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) excepts a debt based on a written financial statement from discharge only if the creditor reasonably relied on a materially false statement made or published with intent to deceive.

Fifth Third Bank of Toledo N.A. v. Frugh (In Re Frugh) · filed 1991-09-13(a)(2)(B)

The court is not persuaded that plaintiff’s reliance on the financial statement in issue was reasonable. ... Considering the totality of the circumstances and the final terms of the parties’ loan arrangement, the court does not find that defendant acted with intent to deceive, recklessness, indifference or a disregard for accuracy.

Section 523(a)(2)(B) requires a creditor seeking to prevent discharge to prove reasonable reliance on a materially false written statement about the debtor’s financial condition.

Illinois Regional Bank v. Lofstrom (In re Lofstrom) · filed 1991-10-31(a)(2)(B)

In short, IRB has failed to prove by a preponderance of the evidence that its reliance on Lofstrom’s financial statements was reasonable.

Section 523(a)(2)(B) requires a creditor, including the FDIC, to prove reasonable reliance on a materially false financial statement to except the resulting debt from discharge.

Federal Deposit Insurance v. Rotman (In Re Rotman) · filed 1991-11-06(a)(2)(B)(iii)

The plain meaning of § 523(a)(2)(B) reflects that Congress required that a creditor must reasonably rely on a material false financial statement before a debt obtained by the use of such a statement will be excepted from discharge.

Section 523(a)(2)(B) permits a finding of intent to deceive when a debtor recklessly disregards the accuracy of a written financial statement.

National Union Fire Insurance Co. of Pittsburgh v. Main (In Re Main) · filed 1991-12-02(a)(2)(B)

Recklessness, indifference, or disregard for accuracy may support a finding of intent to deceive.

Section 523(a)(2)(B)'s reasonable reliance requirement asks whether the creditor reasonably relied on the debtor's financial statements in making the loan, rather than whether making the loan itself was reasonable.

In Re Ronald E. Watson and Terri Louise Watson, Debtors. Security National Bank and Trust of Norman, Oklahoma v. Ronald · filed 1992-02-18(a)(2)(B)

The issue of reasonableness presented under § 523(a)(2)(B) is not whether it was reasonable for the Bank to have loaned Debtor $28,000, but whether it was reasonable for the Bank to have relied upon Debtor's financial statements in making that loan.

A creditor can reasonably rely on a debtor’s false financial statement without independently verifying it when the circumstances support that reliance.

In Re Ronald E. Watson, and Terri Louise Watson, Debtors. Leadership Bank, N.A., a National Banking Association v. Ronal · filed 1992-03-03(a)(2)(B)(iii)

Under these circumstances, although Debtor was a new customer, the Bank’s reliance on Debtor’s financial statement was not unreasonable, despite the Bank’s failure to verify the information in the financial statement, in light of the guarantor’s ongoing relationship with the Bank.

Section 523(a)(2)(B)(iii) requires a creditor to prove that it relied on a debtor’s financial statement; the debtor’s signature alone does not establish reliance.

American Credit Services, Inc. v. Kabel (In Re Kabel) · filed 1992-03-04(a)(2)(B)(iii)

But in carrying the burden of proof under 11 U.S.C. § 523(a)(2), a creditor may not rest upon such signature as a substitute for proof that it “relied” upon the contents of the application, and that its reliance was reasonable.

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

Crenshaw Associates v. Martin (In Re Martin) · filed 1992-03-11(a)(2)(B)(iii)

As a result of this proscription Crenshaw is unable to meet its burden of proving reasonable reliance as required by 11 U.S.C. § 523(a)(2)(B)(iii).

Section 523(a)(2)(B)(iv) requires a creditor to prove intent to deceive or reckless disregard for the truth; a false financial statement alone does not establish intent.

Southwest Financial Bank & Trust Co. of Orland Park v. Stratton (In Re Stratton) · filed 1992-05-12(a)(2)(B)(iv)

Without proof of the debtors’ state of mind in submitting the financial statements to the Bank, the debt the debtors owe the Bank cannot be found to be nondischargeable and the burden of going forward does not shift to the debtors. The debtors do not have to prove they did not have the requisite intent. Instead the Bank must prove the debtors acted intentionally or with reckless disregard.

Section 523(a)(2)(B) requires a creditor to prove reasonable reliance on a debtor’s written financial statement; obvious warning signs may require further inquiry.

Northmark Bank v. Herzog (In re Herzog) · filed 1992-05-28(a)(2)(B)

For the reasons set forth herein the Court concludes that the Bank failed to prove that it reasonably relied on the financial statements provided by Herzog. Absent such a finding, the debt Herzog owes to the Bank is dischargeable.

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

Florence Savings Bank v. Scheer (In re Scheer) · filed 1992-06-12(a)(2)(B)

The plaintiff Bank’s complaint against the debtor for a determination that the debtor’s liability to the Bank under his personal guaranty of the obligations of Hampshire is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(B) shall be dismissed for failure to prove that the Bank reasonably relied on the debtor’s written personal financial statement when it made the $250,-000.00 loan to Hampshire.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive the creditor.

First National Bank LaGrange v. Martin (In Re Martin) · filed 1992-06-19(a)(2)(B)

Similarly, for a debt to be nondischargeable under section 523(a)(2)(B), the debtor must have intentionally deceived the creditor.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains money through a materially false written statement about the debtor’s or an insider’s financial condition, on which the creditor reasonably relies, that the debtor causes to be published with intent to deceive.

Abell v. Fryar (In Re Fryar) · filed 1992-08-07(a)(2)(B)

These same factors were considered by the jury in the instant case. Fryar solicited funds from the investors through offering documents. Those documents were found to be materially false. They related to the financial condition of Fryar and Westside. Plaintiffs reasonably relied upon them. Fryar caused them to be distributed with the intent to deceive. This Court finds that the necessary elements for a determination of non-dischargeability under § 523(a)(2)(B) have been established.

Section 523(a)(2)(B) concerns statements about a debtor’s overall net worth or earning capacity, rather than statements about a property’s liens and construction status.

Jokay Co. v. Mercado (In Re Mercado) · filed 1992-09-03(a)(2)(B)

The ordinary usage of “statement” in connection with “financial condition” denotes either a representation of a person’s overall “net worth” or a person’s overall ability to generate income.

Section 523(a)(2)(B) does not except a debt from discharge when a creditor unreasonably relies on an unverified claim that a retirement account is liquid.

In the Matter of Rodney Dale Coston and Billie Katherine Coston, Debtors. Rodney Dale Coston and Billie Katherine Coston · filed 1992-10-30(a)(2)(B)

We hold that the Bank was not reasonable in thus relying on the listing of Rodney’s account in the retirement fund as the main source of the borrower’s liquidity. This was demonstrated by the Bank's own subsequent act of verifying liquidity — actually, the lack of liquidity — in connection with the second loan. We therefore conclude as a matter of law that the $175,000 loan was subject to discharge and that the bankruptcy court erred in excepting it under § 523.

Section 523(a)(2)(B) requires reasonable reliance on a materially false written financial statement; that reliance is a factual question reviewed for clear error.

In Re Jerry Woolum Kayetta Woolum, Debtors. Bank One, Lexington, N.A. v. Woolum · filed 1992-11-04(a)(2)(B)

Applying these standards, we conclude that the bankruptcy court’s findings that Bank One actually relied upon Dr. Woolum’s written financial statements in making the two loans that it seeks to except from discharge and that this reliance was reasonable are not clearly erroneous.

Section 523(a)(2)(B) requires reasonable reliance; a creditor cannot reasonably rely on a debtor’s failure to volunteer information the creditor did not expressly request.

Bensenville Community Center Union v. Bailey (In Re Bailey) · filed 1992-11-02(a)(2)(B)

Plaintiff cannot be said to have reasonably relied on Bailey’s failure to volunteer information that was not expressly asked of him. Therefore, plaintiff did not establish that it reasonably relied on the non-disclosure of child support in the credit application.

Section 523(a)(2)(B) treats a written loan application that conceals a material liability as materially false.

American General Finance, Inc. v. Steinbrunner (In Re Steinbrunner) · filed 1992-11-30(a)(2)(B)

Despite defendants' testimony to the contrary, the court finds that defendants omitted, or indeed concealed, a material liability. ... The court finds that defendants’ loan application was materially false.

Section 523(a)(2)(B) requires proof that each debtor intended to deceive; signing documents containing false information alone does not establish that intent.

Hudson Valley Water Resources, Inc. v. Boice (In Re Boice) · filed 1992-12-17(a)(2)(B)(iv)

Absent proof of intent, Plaintiff has not established the nondischargeability of its claim against Donna Boice pursuant to Code § 523(a)(2)(B).

Section 523(a)(2)(B)’s intent to deceive requirement can be met by reckless disregard for the accuracy of a debtor’s financial statement.

Avco Financial Services, Inc. v. Frey (In Re Frey) · filed 1992-12-29(a)(2)(B)

Under section 523(a)(2)(B), a creditor need not show that the debtor had actual knowledge of the falsity of financial information provided to the creditor. Rather, a creditor can establish the requisite intent to deceive upon a showing of either actual knowledge of the falsity of the statement or reckless indifference to or reckless disregard for the accuracy of the information in the financial statement of the debtor.

Section 523(a)(2)(A) requires a creditor to prove that the debtor made a false representation with intent to deceive.

Agricredit Acceptance Corp. v. Gosnell (In Re Gosnell) · filed 1992-12-31(a)(2)(A)

Accordingly Agricredit has failed to meet its burden by establishing the first requisite under § 523(a)(2)(A) i.e. that the Debtor made a false representation with the purpose and intent of deceiving Agricredit as Creditor.

Section 523(a)(2)(B) makes a debt nondischargeable when a debtor causes a materially false written financial statement to be made with intent to deceive and a creditor reasonably relies on it in extending credit.

Federal Deposit Insurance v. Reisman (In Re Reisman) · filed 1993-01-06(a)(2)(B)

In light of the foregoing, the debtor’s obligation to the plaintiff in the sum of $1,427,861.77, as reflected in the state court judgment dated January 3, 1992, is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(B).

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

In Re O'Connor · filed 1993-01-06(a)(2)(B)

This Court also finds that IHMV failed to prove by a preponderance of the evidence that O'Connor's financial statement was materially false, that he published it with intent to deceive, that IHMV reasonably relied on the statement, and that the loss proximately resulted from the financial statement.

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

Miller v. Boles (In Re Boles) · filed 1993-02-16(a)(2)(B)

Debtor intended to deceive the plaintiff by giving her a bank loan application form that substantially understated the extent of his outstanding liabilities on which plaintiff reasonably relied. Plaintiff would not have pledged her property as collateral for debt- or’s consolidation loan had she known the true extent of his debts. Therefore, the debts owed to Altus Bank and to plaintiff Dorothy Miller are nondischargeable under § 523(a)(2)(B).

Section 523(a)(2)(B) permits a claim based on a written financial statement to proceed despite alleged oral updates when factual questions remain about the statement’s accuracy and the creditor’s reliance.

Bidwill v. Hannegan (In re Hannegan) · filed 1993-05-04(a)(2)(B)

The Court agrees that the Debtor has not demonstrated that he deserves a grant of his Motion for Summary Judgment on Count Two of the Plaintiff’s Complaint. Issues remain regarding the accuracy and veracity of the written statement, the reasonableness of Plaintiff’s reliance on the statement, and other elements of § 523(a)(2)(B) apart from the oral nature of some of the statements upon which Plaintiff claims to have relied.

Section 523(a)(2)(B) does not except a renewed loan from discharge when the lender received an accurate financial statement before renewal and had no basis to claim it was misled.

In Re Robert G. Walters and Eileen Walters, Debtors. v. Bank of Gibson City v. Robert G. Walters · filed 1993-04-14(a)(2)(B)

Moreover, the Bank's allegations do not point to any omissions from the last of the several financial statements filed by Walters, and, since the loans were renewed after the the Bank's receipt of that clearly accurate financial statement, the Bank has no basis to claim it was misled.

Reasonable reliance under § 523(a)(2)(B)(iii) can be supported by prior dealings, repeated financial statements, and an absence of warning signs calling for further investigation.

McGhee v. First National Bank of Ferrum · filed 1993-05-06(a)(2)(B)(iii)

In this case the bankruptcy court did not commit clear error in concluding that both Crestar and FNBF reasonably relied on repeated false representations in the McGhees' financial statements in extending further credit to the McGhees. The bankruptcy court also did not err in holding the McGhees' liable on a commercial loan guarantee signed by the McGhees. Because the bankruptcy court did not commit error in this case, we affirm its decision to except Crestar and FNBF's debts from discharge.

A bankruptcy court’s finding that a creditor reasonably relied on a debtor’s financial statement under § 523(a)(2)(B) is reviewed for clear error.

Coston v. Bank of Malvern (In Re Coston) · filed 1993-05-19(a)(2)(B)

In sum, we hold that the bankruptcy court's reasonableness of reliance determination under section 523(a)(2)(B), being factual in nature, is reviewable only for clear error.

Section 523(a)(2)(B)(iv)’s intent-to-deceive requirement is met when a debtor recklessly submits financial statements he knows are false.

In Re Howard P. Batie, Debtor. Investors Credit Corporation v. Batie · filed 1993-06-02(a)(2)(B)(iv)

In this circuit, however, section 523(a)(2)(B)(iv) is met if a debtor is reckless when submitting financial statements that he knows are not true, not only if the debtor possesses a subjective intent to deceive.

Section 523(a)(2)(B) does not require a creditor to investigate a financial statement merely because it contains whiteouts and handwritten additions.

Matter of Young · filed 1993-06-14(a)(2)(B)

The only purportedly questionable circumstance Young points to is the existence of whiteouts and handwritten additions to the financial statement, most of which was typed. This is not such a "red flag" as to invoke a duty to investigate.

A creditor’s reliance on a written financial statement is assessed under the totality of the circumstances; whiteouts and handwritten additions did not require investigation here.

In the Matter of James S. YOUNG, Debtor. James S. YOUNG, Appellant, v. NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH, · filed 1993-06-29(a)(2)(B)

Whether a creditor’s reliance is reasonable is to be determined from the totality of the circumstances. The only purportedly questionable circumstance Young points to is the existence of whiteouts and handwritten additions to the financial statement, most of which was typed. This is not such a “red flag” as to invoke a duty to investigate. All things considered, we are not left with the definite and firm conviction that the bankruptcy court made a mistake in finding that National Union reasonably relied on the financial information in Young’s application, or in its ultimate conclusion that Young’s debt was nondischargeable.

Section 523(a)(2)(B) requires reasonable reliance on a debtor’s written financial statement; a creditor’s knowledge that a listed asset was not owned by the debtor would negate that reliance.

Ag Credit, ACA v. Walton (In Re Walton) · filed 1993-07-08(a)(2)(B)

If Ag Credit’s predecessor had knowledge that Debtors did not own the apartment complex, this knowledge would negate reasonable reliance by Ag Credit. Therefore, there is a genuine issue of material fact that this Court cannot determine on this motion for summary judgment.

Under § 523(a)(2)(B), whether a creditor reasonably relied on a debtor’s financial statement is a factual question reviewed on appeal only for clear error.

In the Matter of Rodney Dale Coston and Billie Katherine Coston, Debtors. Rodney Dale Coston and Billie Katherine Coston · filed 1993-07-13(a)(2)(B)

In sum, we hold that the bankruptcy court’s reasonableness of reliance determination under section 523(a)(2)(B), being factual in nature, is reviewable only for clear error.

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

Crossroads, Ltd., a California Limited Partnership v. Corcoran · filed 1993-07-14(a)(2)(B)(iii)

Because we conclude that the bankruptcy court did not clearly err in finding that there was no reliance under section 523(a)(2)(B)(iii), and that the court properly dismissed Crossroads' non-dischargeability complaint on this ground, it is unnecessary to address the remainder of Crossroads' arguments.

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

First International Bank v. Kerbaugh (In Re Kerbaugh) · filed 1993-09-15(a)(2)(B)

For the aforementioned reasons, the court concludes that First International Bank has proven by a fair preponderance of the evidence all the requisite elements necessary to support the denial of discharge under § 523(a)(2)(B).

Section 523(a)(2)(A) does not make a debt nondischargeable based on oral statements about the debtor’s net worth or ownership of assets, because those statements concern the debtor’s financial condition.

Paterno Imports, Ltd. v. McBee (In re McBee) · filed 1993-07-20(a)(2)(A)

The question before the court is whether these statements were “statements respecting the debtor’s financial condition.” If so, they cannot serve as a basis for nondischargeability under § 523(a)(2)(A). ... The court concludes that the debtor’s alleged statements regarding his net worth and ownership of the assets listed on his financial statement were statements respecting his financial condition. Accordingly, these statements cannot be used to support count 2 of plaintiff’s complaint.

Section 523(a)(2)(A) does not make a debt nondischargeable based on an oral false statement about the debtor’s financial condition.

Harmon v. McGee (In Re McGee) · filed 1993-08-19(a)(2)(A)

The Court concluded that obtaining money by an orally given false financial statement precludes a determination of nondischargeability of a debt under 11 U.S.C. § 523(a)(2)(A) and found that the debtor should have judgment as a matter of law pursuant to Federal Rule of Bankruptcy Procedure 7052(c) against the plaintiff on the § 523(a)(2)(A) issue.

Section 523(a)(2)(B) does not require a creditor who relied on a false financial statement to renew a loan to prove that it could have collected the loan before bankruptcy.

In Re Paul W. Goodrich, Debtor. Shawmut Bank, N.A. v. Goodrich · filed 1993-07-26(a)(2)(B)

We agree with Shawmut that the only detriment that need be shown is the renewal of the loan.

Section 523(a)(2)(B) requires a creditor to prove that a debtor’s written financial statement was false; using replacement cost alone does not establish falsity.

In Re Paul D. Newman and Norma J. Newman, Debtors. Michigan National Bank v. Paul D. Newman and Norma J. Newman · filed 1993-08-27(a)(2)(B)

However, valuing an asset at its replacement cost is not per se a false valuation, because an asset may have a fair market value equal to its replacement cost. ... To carry the burden of proof, a creditor may not rely on generalized probabilities that a debtor's use of replacement value is wrong.

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

Vangelisti v. Kerbaugh (In Re Kerbaugh) · filed 1993-09-23(a)(2)(B)

All elements of Rick Vangelisti’s complaint for nondischargeability under § 523(a)(2)(B) of the Bankruptcy Code have been satisfied. Accordingly, IT IS ORDERED that judgment be entered in favor of Rick Vangelisti, and against the debtor David B. Kerbaugh declaring that the state court judgment debt in favor of Rick Van-gelisti, and against the debtor, David B. Kerbaugh in the sum of $67,339.25 is non-dischargeable in bankruptcy.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive the creditor with a written statement.

Cape County Bank v. Lane (In Re Lane) · filed 1993-10-05(a)(2)(B)

Without an intent to deceive, there can be no violation of section 523(a)(2)(B), hence, the Court will deny the Bank’s request for relief under that section.

Section 523(a)(2)(A) and (B) require the creditor to prove a knowing false representation, reliance, and intent to deceive to except a debt from discharge.

First of America Bank v. Bourdon (In re Bourdon) · filed 1993-11-09(a)(2)(A) and (B)

Accordingly, the court finds that the Bank has not proven by a preponderance of the evidence that Debtors knowingly made a false representation, which the Bank relied upon, and which was made with the intent of deceiving the Bank.

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.

Citibank, N.A. v. Williams (In Re Williams) · filed 1993-10-08(a)(2)(B)

Having failed to establish the reasonableness of its reliance on Williams’ financial statements, we conclude that Citibank has not met its burden under § 523(a)(2)(B) to have Williams’ debt to it declared nondischargeable. Accordingly, that request is DENIED.

Section 523(a)(2)(B) can except a mortgage deficiency from discharge when the debtors obtained the loan through a materially false written financial statement that the lender reasonably relied on and the debtors adopted with intent to deceive.

First Federal Savings & Loan Ass'n of Rochester v. Kelley (In Re Kelley) · filed 1993-12-06(a)(2)(B)

Any deficiency judgment which may arise as a result of the foreclosure proceeding is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) requires a creditor to have actually and reasonably relied on a materially false written financial statement before the debt can be excepted from discharge.

Ramsey National Bank & Trust Co. v. Dammen (In Re Dammen) · filed 1994-01-04(a)(2)(B)

For a debt to be excepted from discharge under § 523(a)(2)(B), the creditor’s reliance on the materially false written statement must satisfy a two-part inquiry by demonstrating that its reliance was both actual and reasonable.

Section 523(a)(2)(A) does not except a debt from discharge based on an implied representation of the debtor’s ability to pay, because it concerns the debtor’s financial condition.

Norwest Bank of Iowa, N.A. v. Orndorff (In Re Orndorff) · filed 1994-01-18(a)(2)(A)

This is a representation as to Debtor’s financial condition which cannot be used to except a debt from discharge under § 523(a)(2)(A).

Section 523(a)(2)(B) covers a false written statement about a corporation’s financial condition when the debtor is its director and president.

Bombardier Capital, Inc. v. Rodi (In Re Rodi) · filed 1994-02-01(a)(2)(B)(ii)

Since Rodi is the director and president of Lighthouse Marine, this statement respecting Lighthouse Marine’s condition is actionable under § 523(a)(2)(B).

Section 523(a)(2)(B) excepts a loan from discharge when debtors obtain it through materially false written financial statements made with intent to deceive and reasonably relied on by the lender.

Ag Credit, ACA v. Walton (In Re Walton) · filed 1994-03-02(a)(2)(B)

The financial statements which the Wal-tons submitted to the Bank in obtaining the Loan were materially misstated. ... These written statements were made with the degree of gross recklessness from which this Court will infer an intent to defraud. ... Moreover, the Bank provided substantial evidence at trial that its reliance on the Waltons’ financial statements was not “so unreasonable as to defeat a finding of reb-anee in fact”. ... Therefore, the Court finds that the Loan should be excepted from discharge.

Section 523(a)(2)(B) requires proof that the creditor reasonably relied on the debtor’s written statement about financial condition.

Anthem Life Insurance v. Izaguirre (In Re Izaguirre) · filed 1994-03-22(a)(2)(B)

The missing element is that of reasonable reliance on the Debtor’s misrepresentations. Anthem has shown no fact to support a finding that it reasonably relied upon the Statements.

Section 523(a)(2)(B)(iv)’s intent-to-deceive requirement can be satisfied by reckless disregard for the accuracy of a written statement about financial condition.

Pittsburgh Police Federal Credit Union v. Lundy (In Re Lundy) · filed 1994-03-23(a)(2)(B)(iv)

Because of this belief, debtor was reckless and indifferent and disregarded the need for accuracy and thereby intended to deceive PPFCU and ACCU for purposes of 11 U.S.C. § 523(a)(2)(B)(iv).

Section 523(a)(2)(B) requires a creditor to have relied on the debtor’s financial statement in accepting the transaction.

Paterno Imports, Ltd. v. McBee (In Re McBee) · filed 1994-05-10(a)(2)(B)

A fundamental requirement of reliance under § 523(a)(2)(B) is that the creditor prove the debtor was under a duty to furnish a financial statement as part of the credit transaction. ... Similarly in the instant case, I find that plaintiff effectively accepted the personal guaranty without reservation on November 10, 1988. Therefore, the plaintiff could not have relied on the financial statement produced on November 11, 1988.

Section 523(a)(2)(B) makes the reasonableness of a creditor’s reliance on a financial statement depend on the circumstances, including whether the creditor had reason to investigate.

Janis Bomis, Debtor-Appellant v. National Union Fire Insurance Co., Creditor-Appellee · filed 1994-05-23(a)(2)(B)

Thus, in the Sixth Circuit, the reasonableness of the creditor's decision not to investigate depends on the circumstances generally thought most relevant to the reasonableness inquiry.

Section 523(a)(2)(B) requires a creditor to prove by a preponderance of the evidence that it reasonably relied on materially false written financial information submitted with intent to deceive.

Republic Bank v. Fineberg (In Re Fineberg) · filed 1994-07-13(a)(2)(B)

To establish its claim under 11 U.S.C. § 523(a)(2)(B), Republic Bank was required to prove by a preponderance of the evidence that Fineberg submitted materially false information to it, in writing, with the intent to deceive the bank into lending him money, and that the bank reasonably relied on this information. ... However, Republic Bank never succeeded in proving that it in fact received materially false information from Fineberg, and that Fineberg intended to deceive it by submitting such false information.

Section 523(a)(2)(B) makes a debt nondischargeable when a debtor knowingly makes a materially false financial representation with intent to defraud and the creditor reasonably relies on it.

Red Oak Branch of Farmers State Bank of Quinton v. White (In re White) · filed 1994-06-06(a)(2)(B)

In order to prove a ease under § 523, the Plaintiff must show that (1) the debtor made a materially false representation; (2) that such representation was made knowingly with the intent to defraud; and (3) Plaintiff reasonably relied on a false representation. ... Thus, the Plaintiff has satisfied all the elements to have its debt determined nondischargeable under § 523.

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 relies, made with intent to deceive; a reckless understatement of liabilities can establish that intent.

Amsouth Financial Corp. v. Warner (In Re Warner) · filed 1994-06-16(a)(2)(B)

Thus based on all the foregoing, the Court finds that AmSouth has carried its burden of proof of the § 523(a)(2)(B) issue by a preponderance of the evidence. AmSouth has shown that the Debtor obtained money by use of a statement in writing that was materially false respecting the debtor’s financial condition on which AmSouth reasonably relied, and that the debtor submitted the statement with an intent to deceive AmSouth about its financial condition, or that Debtor’s action in grossly understating liabilities was so reckless as to be tantamount to an intent to deceive.

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

First American Bank of New York v. Bodenstein (In Re Bodenstein) · filed 1994-06-14(a)(2)(B)

The reasonable reliance requirement under § 523(a)(2)(B) has two aspects. Not only must the creditor demonstrate reliance upon the false financial statement, but it also must establish that the reliance was reasonable.

Section 523(a)(2)(B) requires a creditor to rely on a materially false financial statement, but the statement need not be the only document the creditor considered.

First Tennessee Bank National Ass'n v. Warner (In re Warner) · filed 1994-06-16(a)(2)(B)

There is no requirement that the materially false statement be the sole document on which the lender relies but simply that there be reliance on the document.

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

AVCO Financial Services, Inc. v. Abdul'Faruq (In Re Abdul'Faruq) · filed 1994-12-08(a)(2)(B)

AVCO has failed to show that the loan would not have been made had the RTCU debt been disclosed and, therefore, that the omission was material. AVCO has also failed to show by a preponderance of the evidence that it reasonably relied upon the Abdul’Fa-ruqs’ written credit application.

Section 523(a)(2)(B)(iii) requires a creditor to reasonably rely on the debtor's false financial statement before the debt is nondischargeable.

In Re Isidor Friedman and Dorothy Friedman, Debtor. Isidor Friedman Dorothy Friedman v. Philip C. Grace David A. Siegel · filed 1995-01-27(a)(2)(B)(iii)

Section 523(a)(2)(B)(iii) now explicitly requires that the creditor reasonably rely on debtor's false financial statement before a debt is judged non-dischargeable.

Section 523(a)(2)(B) makes a debt nondischargeable only to the extent the debtor obtained credit through a false written financial statement; consolidating an existing loan does not by itself make its balance nondischargeable.

South Division Credit Union v. McFarland · filed 1995-03-10(a)(2)(B)

Only the $3,500 was obtained by means of the false financial statement, and hence, only that debt is non-dischargeable. To conclude otherwise would render the “to the extent obtained” language of section 523(a)(2)(B) meaningless.

Section 523(a)(2)(A) requires a credit card issuer seeking to except a debt from discharge to prove that it reasonably relied on the debtor’s implied representation of an intention and ability to pay.

Colonial National Bank, USA v. Carrier (In Re Carrier) · filed 1995-03-23(a)(2)(A)

As a consequence, Colonial has failed to demonstrate that it reasonably relied upon the debtor’s implied representation that she had the intention and ability to pay the credit card debt that Colonial was soliciting her to incur.

Section 523(a)(2)(B) requires proof of reasonable reliance on a debtor’s financial statement; the D’Oench, Duhme doctrine alone cannot satisfy that requirement.

Resolution Trust Corp. v. Hilton · filed 1995-04-03(a)(2)(B)

This court expresses no opinion regarding the evidence of reliance, and holds only that the D’Oench, Duhme doctrine, without more, cannot be substituted for the statutory element of reasonable reliance.

Section 523(a)(2)(B)(iv) requires intent to deceive for a debt based on a false financial statement to be excepted from discharge; that intent may be inferred from reckless disregard for the statement’s accuracy.

Unit No. 1 Federal Credit Union v. Walker (In re Walker) · filed 1995-04-10(a)(2)(B)(iv)

Section 523(a)(2)(B)(iv) requires that the debtor have made or published a false financial statement “with intent to deceive” in order for a debt incurred in reliance thereon to be excepted from discharge. As noted below, the requisite intent may be inferred from the circumstances and may be found in the act of a debtor’s “reckless disregard” for the accuracy of the document.

Section 523(a)(2)(B) makes a debt obtained through a false written statement about financial condition nondischargeable when the creditor reasonably relied on it.

Tiffany Promotions, Inc. v. Forman (In Re Forman) · filed 1995-05-02(a)(2)(B)

From the credible testimony of Glass, and all the evidence presented at trial, this Court finds that the Plaintiff reasonably relied on the certification of CCI’s accounts receivable prepared for Plaintiffs benefit by the Debtor, and the representations made by the Debtor on behalf of CCI. ... 3. The judgment debt owed by the debtor to the Plaintiff in the amount of $115,000 plus statutory interest from the date of the judgment is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(B) of the Code.

Section 523(a)(2)(B)(iv) allows a creditor to prove intent to deceive through reckless disregard for the accuracy of a debtor’s financial statement when the circumstances support that inference.

In Re: David Louis Cohn · filed 1995-05-10(a)(2)(B)(iv)

We hold that a creditor can establish intent to deceive by proving reckless indifference to, or reckless disregard of, the accuracy of the information in the financial statement of the debtor when the totality of the circumstances supports such an inference.

Section 523(a)(2)(B) does not impose a categorical duty on creditors to verify a debtor's financial statement before relying on it.

In Re Castle · filed 1995-05-17(a)(2)(B)

Finally, we have declined to adopt a per se rule requiring creditors to verify financial statements, and we agree with the bankruptcy court that to do so would essentially render Sec. 523(a)(2)(B) a nullity.

Section 523(a)(2)(B) requires a creditor to prove all four statutory elements, including reasonable reliance on a written financial statement, to prevent discharge.

In the Matter of G. David Broyles Emily Broyles, Debtors. Citizens Bank of Maryland v. G. David Broyles Emily Broyles · filed 1995-06-13(a)(2)(B)

It concluded, however, that to successfully bar a discharge, a creditor must establish all four elements of Sec. 523(a)(2)(B) and that the bank had not demonstrated its reliance upon the contents of the Broyles' financial statements in advancing the 1989 loans or extending the line of credit in 1990. ... We agree with the bankruptcy court's analysis of the statute.

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

PNC Bank, N.A. v. Rodriguez (In re Rodriguez) · filed 1995-08-02(a)(2)(B)

To establish nondischargeability under § 523(a)(2)(B), PNC must prove, to a preponderance of evidence, that Debtors obtained their financing with an intent to deceive, using a written statement that they published or caused to make that contained materially false information pertaining to their financial condition upon which the bank reasonably relied.

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

National Union v. Philo · filed 1995-07-20(a)(2)(B)

It is pristine to this court that the plaintiff reasonably relied on the financial reports in making its decision to bond the debtor.

Section 523(a)(2)(B) requires a materially false financial statement and reasonable creditor reliance to make a debt nondischargeable.

In Re Daniel J. McQuaid Debtor. Daniel J. McQuaid v. First Interstate Bank of California · filed 1995-08-25(a)(2)(B)

The bankruptcy court was not clearly erroneous in determining that ownership of the Farm was material. ... Similarly, the bankruptcy court did not err in determining that the Bank's reliance was reasonable and justifiable.

Section 523(a)(2)(B) treats a debtor’s omission of pending criminal charges from written financial statements as materially false when the charges affect the debtor’s earning capacity.

Drehsen v. Bank of St. Petersburg (In Re Drehsen) · filed 1995-10-17(a)(2)(B)

Appellant’s omission of his two year probationary period beginning April 22, 1992, in both of the personal financial statements, and the compilation report submitted to BOSP, constitutes a materially false statement within the definition of 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) can except an entire renewed debt from discharge when the renewal was obtained through a false financial statement, even if no new funds were advanced.

In the Matter of Robert William Norris and Emily Waller Norris, Debtors. Robert William Norris v. First National Bank in · filed 1995-12-04(a)(2)(B)

In this case, because the renewal of the entire note was “obtained by” Norris’s false documentation, it is the entire note which is excepted from discharge.

Section 523(a)(2)(B) can except an entire renewed debt from discharge when the debtor obtains the renewal through a false written financial statement, even if the lender advances no new funds.

Norris v. First Nat Bnk Luling · filed 1995-12-04(a)(2)(B)

In this case, because the renewal of the entire note was "obtained by" Norris's false documentation, it is the entire note which is excepted from discharge.

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

Continental Bank v. McKinley (In re McKinley) · filed 1995-12-21(a)(2)(B)(iii)

Even if the discrepancy between $16.4 million and $12.6 million was “capable of influencing” the Bank’s decision to lend $250,000, and, therefore, was a material falsity, the Bank has not established that it reasonably relied on the misstatement, as is its burden pursuant to § 523(a)(2)(B)(iii).

Section 523(a)(2)(B) treats a written financial statement as materially false when a debtor substantially overstates the value of her principal asset and inflates her net worth.

European American Bank v. Launzel-Pennes (In Re Launzel-Pennes) · filed 1996-01-12(a)(2)(B)

Bankruptcy Code section 523(a)(2)(B) excepts from discharge certain debts incurred by use of a false written statement about a debtor’s financial condition. ... This Court finds the Debtor’s representation of the market value of her property to have been a material false statement.

Section 523(a)(2)(B) can except a debt from discharge when a creditor renews credit or forbears from collection in reliance on a materially false written financial statement made with intent to deceive.

First Commercial Bank v. Robinson (In Re Robinson) · filed 1996-02-13(a)(2)(B)

The Bank presented two theories of non-dischargeability under 11 U.S.C. § 523(a)(2)(B). One based on the Bank’s renewal of credit and the other on its forbearance in defaulting and accelerating repayment of an extension of credit. The Bank prevails under both theories. The debt, $202,675.36, is nondischargeable.

Section 523(a)(2)(B)(i) requires a false financial statement to misrepresent information that would normally affect a decision to grant credit.

In Re Nicholas J. Furio and Nannete Furio, Debtors. Bethpage Federal Credit Union v. Furio · filed 1996-02-22(a)(2)(B)(i)

We agree with the bankruptcy court that the falsehood — the omission of the child support obligation — was not “material” within the meaning of section 523(a)(2)(B)(i), and therefore affirm the district court’s judgment that the debt is dis-chargeable on that ground.

Section 523(a)(2)(B) does not make a debt nondischargeable merely because the debtor overestimated future sales.

Mozeika v. Townsley (In Re Townsley) · filed 1996-04-10(a)(2)(B)

This Court will not impose liability under § 523(a)(2)(B) for merely overestimating future sales.

Section 523(a)(2)(B) permits a court to infer that a financial statement was materially false from later bankruptcy schedules when the discrepancy is large, the interval is short, and the difference is unexplained.

Enterprise National Bank of Atlanta v. Jones (In Re Jones) · filed 1996-05-13(a)(2)(B)

Material falsehood may in some cases be inferred from the differences between the financial statement and the bankruptcy schedules when the discrepancies are large, the time period separating the events is short and the differences are unexplained.

Section 523(a)(2)(B) makes both a refinanced balance and additional credit nondischargeable when the creditor reasonably relied on a materially false written financial statement in extending them.

In the Matter of Dorothy McFARLAND, Debtor-Appellee. Appeal of SOUTH DIVISION CREDIT UNION · filed 1996-05-23(a)(2)(B)

The Credit Union reasonably relied upon McFarland’s materially false written statement in refinancing her balance of $5,757.17 on the May 1991 note and in extending her additional credit in the amount of $3,500. In accordance with § 523(a)(2)(B) the May 1993 note is nondischargeable in full.

Section 523(a)(2)(B) excepts a debt from discharge when the debtor obtains credit through a materially false written financial statement on which the creditor reasonably relies.

Staten Island Savings Bank v. Scarpinito (In Re Scarpinito) · filed 1996-06-03(a)(2)(B)

We find the Bank has established by a preponderance of the evidence that Scarpinito’s debt to it, based on the New York state court judgment in the amount of $1,102,316.14, is excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(B).

Section 523(a)(2)(B) does not require a creditor to prove that the debtor’s misrepresentation proximately caused its loss.

Beneficial National Bank v. Priestley (In Re Priestley) · filed 1996-06-06(a)(2)(B)

However, Priestley’s position with respect to Code § 523(a)(2)(B) is inconsistent with the express language of the Code, which does not articulate a proximate causation requirement.

Section 523(a)(2)(A) and (B) require justifiable or reasonable reliance, respectively, to except a debt from discharge.

Federal Deposit Insurance Corp. v. Meyer (In Re Meyer) · filed 1996-06-24(a)(2)(A) and (B)

The Supreme Court case Meyer cites in support of his reliance argument demonstrates that either reasonable or justifiable reliance is a necessary element to non-dis-chargeability determinations under §§ 523(a)(2)(A) and (B).

Section 523(a)(2)(B)(iii) sets a low threshold for reasonable reliance, and whether a creditor meets it is a question of fact.

In Re Gloria Bonnanzio, Debtor. National Union Fire Insurance Company of Pittsburgh, Pa. v. Bonnanzio · filed 1996-07-19(a)(2)(B)(iii)

Although the reasonableness requirement of § 523(a)(2)(B)(iii) presents a low threshold for National Union to meet, whether National Union has met that threshold is a question of fact.

Section 523(a)(2)(B) requires a debtor to affirm a written financial statement; oral statements later recorded by a creditor do not satisfy the writing requirement.

Bellco First Federal Credit Union v. Kaspar (In Re Kaspar) · filed 1996-09-06(a)(2)(B)

Since here it is undisputed that the Kaspars did not affirm Belleo’s internally generated document in any respect, their oral representations alone cannot satisfy the “in writing” requirement of section 523(a)(2)(B).

Section 523(a)(2)(B) requires both reasonable reliance on a materially false written financial statement and intent to deceive before the resulting debt is excepted from discharge.

Mester v. Brevard (In Re Brevard) · filed 1996-09-26(a)(2)(B)

Since under § 523(a)(2)(B) both reasonable rebanee and an intent to deceive are essential elements of nondischargeabibty, the debt is not excepted from discharge.

Section 523(a)(2)(B) treats substantial inaccuracies of the type that would generally affect a lender’s or guarantor’s decision as material misrepresentations.

In Re Richard W. Candland, Debtor. Richard W. Candland v. Insurance Company of North America · filed 1996-10-02(a)(2)(B)

Material misrepresentations for this statutory section are substantial inaccuracies of the type which would generally affect a lender’s or guarantor’s decision.

Section 523(a)(2)(B)(iii) requires a creditor to know the contents of a debtor’s written financial statement and reasonably rely on them.

Farraj v. Soliz (In Re Soliz) · filed 1996-10-08(a)(2)(B)(iii)

Lacking controlling precedent on the question, I conclude that section 523(a)(2)(B) is not applicable where the creditor-plaintiff had never seen and had no knowledge of the contents of the written statement in question.

Section 523(a)(2) does not except a debt from discharge based on an oral statement respecting the debtor’s financial condition; subsection (A) excludes it, and subsection (B) requires a writing.

Norcross v. Ransford (In Re Ransford) · filed 1996-11-01(a)(2)

No action can be maintained under § 523(a)(2)(A) on an oral statement respecting a debtor’s financial condition. Further, because the statements were not communicated in writing, no action can be maintained thereon under § 523(a)(2)(B).

Section 523(a)(2)(B) requires reasonable reliance on a debtor’s written financial representations; under these circumstances, the creditor needed little investigation.

Gosney v. Law (In Re Gosney) · filed 1996-11-26(a)(2)(B)

Under the circumstances here, the court requires little investigation from a creditor when determining whether the creditor reasonably relied on the debtor’s representations.

Section 523(a)(2)(A) excludes claims based on statements about a debtor’s or insider’s financial condition, including statements about whether assets are encumbered.

Armbrustmacher v. Redburn (In Re Redburn) · filed 1996-12-06(a)(2)(A)

Thus, as “statements respecting [RAL’s] financial condition,” the claims which concern these statements are excluded from the reach of subsection (A). Under the statute, in order for the statements to have been actionable, Plaintiffs would have had to plead and prove the elements of subsection (B), including the “in writing” requirement.

Section 523(a)(2)(B) treats the omission of substantial recent debts from a written loan application as a materially false statement about financial condition.

Citibank (S. Dakota), N.A. v. Harris (In Re Harris) · filed 1996-12-11(a)(2)(B)

In this case, the Debtor clearly made statements in writing respecting his financial condition that were materially false. The Debtor failed to disclose on the loan application over $20,000 in loans owed to the Credit Union. These loans were issued or reissued to the Debtor within six months to one day prior to the date the Debtor signed the Citibank loan application. Such an omission is considered a materially false statement under section 523(a)(2)(B).

Section 523(a)(2)(B)'s reasonable reliance requirement can be met even when a lender could have investigated a written financial statement more extensively.

High Springs Bank v. Sandlin (In Re Sandlin) · filed 1984-06-08(a)(2)(B)

We find that while the bank’s efforts to verify the information might have been more extensive, they suffice under the circumstances.

Section 523(a)(2)(B) requires proof that the debtor intended to deceive the creditor; a negligent omission is insufficient.

Phillips v. Napier (In Re Napier) · filed 1997-03-03(a)(2)(B)

Hence, the Court is left with the firm conclusion from the totality of the evidence that the Debtor lacked the requisite intent to deceive the Creditor, although it was negligent for the Debtor not to separately itemize the parental subsidy along with the child support.

Section 523(a)(2)(B) makes a debt nondischargeable when a creditor reasonably relies on a materially false written financial statement that the debtor provides with reckless indifference to its accuracy.

Byrd v. Bank of Mississippi · filed 1997-03-05(a)(2)(B)

In conclusion, this Court finds that the financial statements of the debtor contained materially false statements; that the debtor acted with reckless indifference to, if not actual knowledge of, the materially false statements; and that the Bank of Mississippi reasonably relied on these misstatements in making the loan; therefore, a judgment of nondischargeability pursuant to § 523(a)(2)(B) was warranted.

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 relied on and that the debtor made or published with intent to deceive.

Wilmington Savings Fund Society, FSB v. McKinley (In Re McKinley) · filed 1997-03-24(a)(2)(B)

To prove nondischargeability under § 523(a)(2)(B), Wilmington Savings must establish that Debtor obtained the loan by use of a materially false written statement regarding Debtor’s financial condition on which Wilmington Savings reasonably relied and that Debtor made or published with intent to deceive the bank. We find that Wilmington Savings has proved all elements of nondis-chargeability.

Section 523(a)(2)(B) does not require proof of proximate cause or actual damage beyond its four stated elements.

Wolf v. Campbell · filed 1997-04-01(a)(2)(B)

The determinative issue on appeal is the bankruptcy court’s decision that 11 U.S.C. § 523(a)(2)(B) has a proximate cause requirement not expressly stated in the statute. ... In light of the clear language of the statute, in which Congress set forth a set of four discrete elements, the Court finds that a creditor need do no more than satisfy those elements to obtain a non-discharged judgment.

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

Powell v. Judd (In re Judd) · filed 1997-04-02(a)(2)(B)

For the reasons stated, the Court finds that Powell has failed to prove by a preponderance of the evidence that he actually or reasonably relied on the false balance sheet when he gave his guaranty to Chase Manhattan Bank on Judd’s behalf. Consequently, the Court denies Count I in which Powell sought to except the debt from discharge under § 523(a)(2)(B).

Section 523(a)(2)(B) requires proof of a materially false written statement about financial condition, reasonable reliance, and intent to deceive to except a debt from discharge.

Flagship Bank v. Woollacott (In Re Woollacott) · filed 1997-05-13(a)(2)(B)

The Plaintiff did not prove that the Debtor stated in writing anything materially false on which it reasonably relied and that the Debtor made such statement with intent to deceive.