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The Bankruptcy StrategistFeaturesBanking and Finance LawsBankruptcyLitigation

Which Financial Representations Will Justify a Discharge Objection after Lamar, Archer?

By John A. Thomson, Jr.
November 01, 2018

Since the passage of the Bankruptcy Act of 1898, and particularly since 1926, United States bankruptcy laws have contained a provision that would penalize debtors who use false pretenses or false financial documents to obtain credit. The Supreme Court's decision in Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752, 201 L. Ed. 2d 102 (2018) (Lamar, Archer) has significantly constricted the range and nature of statements that will support a successful objection by a creditor to the discharge of a debt that was obtained by the statements in question. This constriction could have a very real impact on how entities that loan money or provide services on credit review and collect information regarding a borrower's creditworthiness.

The Underlying Statutory Basis for Objecting to the Discharge of a Debt

11 U.S.C. 523(a)(2) currently provides that a debtor cannot obtain a discharge from a debt for money, property, services or an extension or renewal of credit if that debt was incurred or obtained by:

(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition;

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