Burr Alert: Lenders Beware: 11th Circuit holds borrower’s false oral statement regarding single asset does not provide basis for non-dischargeability action under § 523(a)(2)(A)

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Section 523(a)(2) of the Bankruptcy Code is clear that a debtor can discharge a debt for money obtained by a false statement respecting the debtor’s financial condition unless that statement is in writing. What hasnot been clear is whether a debtor’s false oral statement regarding a single asset is a “statement respecting the debtor’s financial condition” that falls within the ambit of § 523(a)(2)(A). If so, debts obtained by such a false oral statement would be dischargeable. If not, then creditors could seek to have such fraudulently obtained debts excepted from discharge. Courts across the country have weighed in on both sides of the issue, causing a significant circuit split.

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