The Supreme Court held that a statement about a single asset can be a "statement respecting the debtor's financial condition" and instructed that if the statement was not in writing, then the associated debt may be discharged even if the statement was false.  A copy of the opinion may be found here.

Appling (“Debtor”) hired a law firm, Lamar, Archer & Cofrin, LLP (“Lamar”) to represent him in business litigation.  The Debtor fell behind on legal bills.  In March 2005, Lamar explained that if the Debtor did not pay the outstanding $60,000 legal bills that Lamar would have to withdraw from representing the Debtor and would seek to recover the unpaid amounts.  The Debtor told Lamar in person that he was expecting a tax refund of approximately $100,000.  Lamar relied on this representation and continued representing the Debtor without initiating collection efforts to recover the overdue amounts.  In October 2005, the Debtor received a tax refund of $59,851 and spent that money on his business.  In November 2005, the Debtor told Lamar that he had not yet received the refund and Lamar again relied on the Debtor’s representations and agreed to complete the pending litigation and delay collecting outstanding amounts owed.  In March 2006, Lamar sent the Debtor its final invoice.  After five years, Lamar obtained a judgment for $104,179.60 against the Debtor.

In 2011, the Debtor filed a chapter 7 bankruptcy petition.  Lamar initiated an adversary proceeding against the Debtor and argued that its debt was not dischargeable because the Debtor made a fraudulent statement about his tax refund during the meetings held in March and November 2005.  The Bankruptcy Court held that a statement regarding a single asset is not a “statement respecting the debtor’s financial condition” and denied the Debtor’s motion to dismiss; it ultimately held that the Debtor made two false representations on which Lamar justifiably relied and found that the Debtor’s obligation to Lamar was non-dischargeable under § 523(a)(2)(A).  The District Court affirmed.  The Eleventh Circuit reversed and held that a statement respecting the debtor’s financial condition may include one about a single asset, but because the Debtor’s statements here were not in writing, § 523(a)(2)(A) did not bar the Debtor from discharging the debt owed to Lamar.

The federal bankruptcy system aims to aid the unfortunate debtor by providing a fresh start in life, free from debts and to that end, the Bankruptcy Code contains broad provisions for the discharge of debts, subject to exceptions.  Section 523(a)(2) provides that a discharge “does not discharge an individual debtor from any debt… for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by” fraud.  Section 523(a)(2)(A) bars discharge of debts arising from “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s… financial condition.”  Section 523(a)(2)(B) bars discharge of debts arising from a materially false “statement… respecting the debtor’s… financial condition” if that statement is “in writing.” 

Here, the Debtor’s statement about a single asset fits because it bears on the debtor’s overall financial condition and helped indicate whether a debtor is solvent or insolvent, able to repay a debt or not.  A statement about a single asset can be a “statement respecting the debtor’s financial condition.”  The statements at issue here were oral and not reduced to writing, therefore, they are dischargeable.