{"id":2470,"date":"2013-12-30T09:00:02","date_gmt":"2013-12-30T14:00:02","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=2470"},"modified":"2018-12-05T01:29:47","modified_gmt":"2018-12-05T01:29:47","slug":"when-can-lenders-challenge-the-dischargeability-of-credit-card-debt","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/when-can-lenders-challenge-the-dischargeability-of-credit-card-debt\/","title":{"rendered":"When Can Lenders Challenge the Dischargeability of Credit Card Debt?"},"content":{"rendered":"

Back in October, we discussed the ten situations<\/a> in which parties can file adversary proceedings. One situation that occurs frequently is the sixth one: determining the dischargeability of a debt. In New York bankruptcy, the type of debt creditors sometimes try to shield from discharge is credit card debt. Because most chapter 7 bankruptcies involve large amounts of credit card debt, lenders that successfully contest a debt’s discharge can somewhat hamper a debtor’s bankruptcy.<\/p>\n

The law creditors rely on to do this is 11 U.S.C. \u00a7 523(a)(2)<\/a>, which bars the discharge of consumer debts for four reasons:<\/p>\n

(1) \u00a0False pretenses<\/p>\n

(2) \u00a0False representation<\/p>\n

(3) \u00a0Actual fraud<\/p>\n

(4) \u00a0Use of a materially false financial statement<\/p>\n

The first three situations somewhat run together and are packed into one line of the statute. They all mean that the debtor deliberately made a factually incorrect statement to the lender to obtain credit, and the lender would not have lent the debtor the money if it had known the statement was false. Examples would include willfully submitting another person’s Social Security number to a lender or lying about one’s income to obtain credit. In these three situations, the Bankruptcy Code grants creditors more protections in two specific circumstances:<\/p>\n