Legal News for Credit Union Managers Since 1990
« Chapter 7 Bankruptcy Dismissed – Debtor Abuse
U.S. Supreme Court Decision on Preferential Transfers »
18
Apr
2009

Credit Card Charges Held Nondischargeable

By Charles R. Harroun, Attorney at Law

Court rules Credit Card Charges Nondischargeable. In this case, the debtor used her VISA card for cash advances in excess of $4,000. The cash advances were used to pay past due house payments as well as other past due debts. A small portion of the cash advances were used to pay for gambling at the local dog track.At the time debtor placed said cash advances on her VISA card, she and her husband had already amassed some $29,000 in other credit card debts.

The VISA creditor filed an adversary complaint alleging the debtor committed fraud under the Bankruptcy Code and upon the creditor by obtaining the cash advances without the intent or ability to repay the obligations.

The issue addressed by this case is whether the use of a credit card by the debtor implies a representation that the debtor has both the intent and ability to repay the debt.

A majority of the courts have adopted what is known as the “implied representation doctrine,” which states that a debtor does make a representation of intent and ability to repay charges.

Here, the court found that the debtor incurred the VISA debt at a time when she was already insolvent. The debtor made no payments towards the charges. The court held that when the charges were incurred, debtor neither had the ability nor intent to repay.

Thus, this debt was nondischargeable. Household Card Services/VISA v. Laura Vermillion, 136 B.R. 225.



This entry was posted on Saturday, April 18th, 2009 at 4:34 am and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your comment

Powered by WP Hashcash

  • Recently Posted Articles written by: Charels R. Harroun, Attorney at Law

    • False Application: Nondischargeable Debt
    • Truth in Lending Violation: Collateral Not Identified
    • Collateral Removed From State – Renewal of Perfected Lien
    • Credit Union & Its Attorney Violate Bankruptcy Stay
    • Credit Union Employee Policies
    • Wrongful Repossession & Conversion: Creditor Held Liable
    • “Investment” Information Provided to Member
    • Nonischargeable Cash Advances
    • Parental Liability: Minor’s Forged Check
    • Debt Cancellation Insurance
    • Credit Union’s Failure to Payoff Existing Mortgage

  • Website Builder

2009-2020 Copyright Harroun, P.C. | Credit Union Legal Newsletter powered by WordPress and Uchilla
Subscribe: Entries (RSS) and Comments (RSS)