In re Jackson (Ch. 7, Case No. 05-53649, Adv. No. 05-05170)

The plaintiff allowed her sister, the debtor, to use her credit cards to make her house and car payments, and meet other obligations. The debtor promised to repay the loans by obtaining a home equity loan or by selling her residence. The debtor did not repay the loans and her applications to obtain a home equity loan were denied. The plaintiff contended the obligations were nondischargeable under Section 523(a)(2)(A). The court held that the plaintiff had not shown that the debtor had sufficient equity in her residence to honor her promise. The court concluded that the plaintiff knew the debtor was in severe financial distress but continued to make loans to the debtor. The court held that the debtor's obligation was dischargeable noting that the failure to perform a mere promise is not sufficient to make a debt nondischargeable.

Wednesday, August 23, 2006