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Debtor's Credit Card Debt Ruled Non-Dischargeable

Posted By admin || 29-Aug-2009

In the Chapter 7 bankruptcy case of (Jenks, Louise E.; In re (GE Money Bank v. Jenks)), the bankruptcy court ruled that the debtor's credit card debt was non-dischargeable because she misrepresented her income when applying for the credit card. The details of the bankruptcy case:
"The 74-year-old debtor applied for a Lowe's credit card on March 15, 2008. She said she had an annual income of $48,000. In fact, her only income was $667 in monthly Social Security payments. Her credit application was approved with a credit line of $12,500. Between May 13 and May 16, the debtor used the card to purchase ap­proximately $5,000 worth of gift cards. There was a balance of $6,039 on the account when she filed for Chapter 7 relief on Aug. 29, 2008. Prior to filing for bankruptcy, the debtor made three payments on the account totaling $160."
The bankruptcy court ruled that the debtor's intention of repaying the cards was not based on any real ability to repay and that since the creditor had relied on the debtor's false income statement the debt should not be discharged in bankruptcy. The court said:
"The facts, as presented, support the plaintiff's contention that any intent that the debtor had to repay the debt was not well-grounded, based as it was on her minimal income and on the supposed promise of her former husband whom she described as being in financial straits. She knew when the gift cards were purchased that the debt was beyond her ability to repay."
The credit card company also provided proof via the credit card application that the debtor had lied about her income.  She clearly stated on the credit card application that she had $48,000 in income.  This is an important bankruptcy case for all debtors because it demonstrates that the courts are willing to hold debtors accountable for providing false information on their credit card applications.  Remember "liar loans"?  Well, we all know that many debtors add imaginary income to their credit card applications.  If you lie about your income on credit card applications you're taking a huge risk.  If it comes to light that you lied you might be denied a bankruptcy discharge.

Source: Consumer Bankruptcy News, Volume 19, Issue 18, page 11)

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